Working through this, together
How to Think About All of This?
If you are reading this, I can most likely assume that you’ve been flooded with news about the market reaction to the recent tariff policy plans. It is hard to find superlatives sufficient to describe the level of disapproval being voiced by the majority of the investment community and beyond. I share these sentiments.
During extreme market events, it can be difficult to stay calm. Let’s take a collective breath and then dig into this, together. At Gunness Financial, we are here for you. We want to help you find your way in the midst of this confusing time. We will work hard to help you understand what to do during times of high market volatility. We also stand ready to help you make and follow a plan that can see you and your family through to the better days that lie ahead.
What Perspective Can History Offer
Capital Group has a long track record of providing dependable context and analysis. The excerpt below is from one of their recent articles[i]. They make the point that periods of market uncertainty are inevitable, but not permanent.
- We are (were) in rarified air: Stocks had been on a tear since 2022. Most years in the markets are very good, which make up for the few bad years. Looking back to 1929, 73% of all years have had positive returns with a median return of 21%. 27% of all years have had negative returns with a median negative return of -9.5%,
- Market surprises and downturns are regular occurrences: A look at history shows that market downturns have been somewhat regular events. Corrections — declines of 10% or more — have occurred about once every 18 months and declines of 5% or more have occurred about twice a year.
Where Might We Find Signs of Optimism?
Many of you might think it’s too soon to consider optimism. I disagree. If we can’t help but consider the negative case, it’s critical to also begin to look beyond this crisis. Yes, outcomes such as recession and slowdown are possible, but so is recovery. How might that begin?
- Tariffs as starting point for negotiations.
- Will there be signs of continued macroeconomic strength.
- Will corporate earnings persevere into Q2.
- Pressure from congress.
- Fiscal and monetary stimulus.
- Valuations eventually become attractive.
Make a Plan, Work Your Plan
It’s one thing to say don’t be emotional, but what does that mean in practice? What should you actually do? We can help you craft the plan that works for you. Jason Zweig, a highly respected writer on topics of personal financial planning for the Wall Street Journal recently wrote about three steps to take. These make a lot of sense. He emphasizes how “thinking clearly right now is harder – but also more important – than ever. [ii]” Paraphrasing from his recent article, here are his three layers of reaction:
- Make financial changes close to home, such as tighten your family budget, pay down debt, do tax loss harvesting, do an overhaul of your budget such as remove unused subscriptions or memberships, and so on. These decisions can help overall and don’t impact your long-term investment or financial plan. This step helps you get active.
- Reallocate, rebalance. Make adjustments within your investment plan to notch things down. These are the types of adjustments that we periodically make to client portfolios in preparation for market trends. We made one such change back in November and another one about a month ago. More adjustments might lie ahead as this evolves.
- Finally, only after you’ve exhausted the prior two steps should you even consider the more radical step of either getting extremely conservative (dumping all stocks and moving to cash) or getting aggressive and going all in to prepare for a rebound.
Conclusion
Market drawdowns like we’ve been experiencing can be very disturbing. In addition to remaining thoughtful as described above, it’s also important to care for your own resilience. Step away from it all with intention and care for yourself, your family, your team, stakeholders, and community. One way to look at market turmoil is to see it as a stress test. Will this situation reveal itself as a moment when our system showed overall resilience, as it has done so often throughout history? I think the answer will be yes.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
[i] Excerpted from Capital Funds article “Should investors be worried about the stock market?” by Martin Romo and Will Robbins
[ii] What to do now that tariffs have decimated your 401(k), by Jason Zweig, Wall Street Journal, April 5, 2025.