Examining Recent Market Volatility

This past week has been an eventful one on Wall Street, with markets reacting sharply to news surrounding new tariffs and global trade tensions. It’s completely natural to feel a bit rattled when headlines are negative and the numbers on your screen are flashing red, but I want to share some context and perspective that may help you navigate this moment with confidence.

First, let’s acknowledge what happened. The market experienced a significant drop, largely triggered by the announcement of new U.S. tariffs. These tariffs—essentially taxes on imported goods—sparked fears of a potential trade war, especially with key partners like China, Canada, and the European Union. While that sounds intense, it’s important to recognize that this may be more about leverage and negotiation than long-term policy.

In fact, the tariffs are set to roll out in phases over the next few days, leaving a window for countries to come to the table. Comments from the administration suggest that this move is designed to bring trading partners to negotiate better terms, rather than to create lasting barriers. There’s already evidence that some countries are entering discussions, and exemptions for key sectors like energy and technology show that the U.S. is keeping the door open for critical global supply chains.

Now, let’s zoom out a bit.

Since 1980, the S&P 500 has seen 21 drops of 10% or more within a calendar year. On average, markets experience a 14% intra-year pullback—even in years that end up in positive territory. This kind of volatility is normal. It’s not comfortable, but it is expected.

What’s been interesting this week is how clients have responded—some have called wanting to take money out of the market, others have wired funds to take advantage of the dip, and many simply asked, “Isn’t this what markets do?” That last perspective is a healthy one.

If you're feeling anxious or unsure, it might be a sign that your portfolio is tilted more aggressively than you're comfortable with. That’s something we can review when things settle. If, on the other hand, you're eager to buy the dip, we can explore whether it's the right time to make some strategic moves. And if you're feeling steady—great. That means your plan is working for you.

The most important thing I can share right now is this: market downturns are normal, and they don’t last forever. In fact, the biggest up days often come shortly after the worst down days. History shows that those who stay invested and avoid reacting emotionally tend to come out ahead. As an example, when investor sentiment hits extreme lows—as it has recently—the average return over the next 12 months has historically been over 24%.

We’ll continue to monitor the markets closely and look for opportunities as they emerge. If you’d like to talk through your investments, your goals, or how you're feeling about all of this, we are always here.

Are you taking more risk by trying to reduce volatility? - Allan Roth

Until Next Time,
 

Darin & Greg