As you are likely aware, markets have recently experienced increased volatility, largely attributed to uncertainty surrounding the new tariff policies. The duration of this volatility and the ultimate policy outcomes remain uncertain.
It is important to remember that periodic market downturns are anticipated within your long-term financial plan. These plans are constructed with the knowledge that market fluctuations, albeit sometimes uncomfortable, are a normal part of investing.
During downturns, it’s common for concerns to arise that “this time is different.” However, history provides valuable perspective. While every market correction or bear market has unique triggers and characteristics – think of major geopolitical events, the 9/11 attacks, the 2008 financial crisis, or the COVID-19 pandemic – they share a common thread: markets eventually recovered. Each of these events felt unprecedented at the time, often causing significant short-term trading activity. Yet, over time, the focus returns to the underlying value of businesses.
While it felt implausible during each crisis, markets did recover. Both the downturns and the subsequent upturns often surprise observers. What would be truly unusual is if fundamentally sound companies, which in this case have had time to adapt to potential tariff impacts, were permanently impaired by such policies.
The most effective way to navigate the discomfort that accompanies market declines is to remain focused on your long-term financial plan and goals. Consider the sharp downturn in early 2020; an investor who ignored the day-to-day noise saw their portfolio recover, illustrating the power of a long-term perspective. Long-term charts often smooth out these volatile periods, showing the general upward trajectory of markets over decades.
We don’t dismiss the current market movements; they reflect genuine economic questions. However, history strongly suggests that such periods are temporary. Our guidance remains consistent: maintain discipline, adhere to your long-term strategy, and resist making emotional decisions based on short-term fear.
As always, please feel free to reach out if you have specific questions or would like to discuss your portfolio.
Sincerely,
The Retirement Investment Advisors, Inc. Team