Forward Focus - April 2025

In January, I wrote that stocks continue to look expensive and that after two years of double-digit returns in the U.S., stock market returns will likely be harder to obtain. That played out in late February and throughout March, then concerns over announced tariffs accelerated downside losses in early April.

What is a Tariff: Taxfoundation.org defines a Tariff as ‘taxes imposed by one country on goods imported from another country.’ Tariffs are taxes added on to the price of a product which increases the cost and impacts consumption and trade. Done sparingly it can raise revenue and curb/influence consumption. Done to excess it can disrupt trade relations, interrupt supply chains, and create uncertainty.

On Wednesday, April 2nd at 4pm in the White House Rose Garden, President Trump announced tariffs on all countries starting on April 5th and higher individualized tariffs on specific countries taking effect on April 9th. The size of the imposed tariffs sent markets cascading lower, leading to further fears of a market crash. This week (April 7-11), markets began to recover, but the road ahead is highly uncertain. On Monday April 7th, erroneous news of a ‘tariff pause’ moved markets 8% in a matter of mere minutes. A bumpy road is likely ahead.

The past three recessions were due to speculation in dot-com stocks, a subprime mortgage crisis, and a global pandemic. The current turmoil in the market is unique because at this stage, the cure can be immediate. Simply announce a pause or specific trade deals and the market will rally. The issue becomes long-lasting if no agreements are reached between countries, tariffs drag on, and no tariff relief is offered.

Market corrections are typically swift and painful, but investing is not about one day, one week or even one year. It is about making wise decisions, remaining invested through hard times, and knowing what your goals are so that you can maintain focus. Investing is a long-term endeavor. Some of the greatest rallies come amidst market pullbacks. A 60/40 portfolio (60% S&P 500 index and 40% Bloomberg U.S. Aggregate Bond index) has produced a positive return in all 5-year, 10-year, and 20-year rolling periods since 1950*. Case in point, despite the breathtaking market reaction and dire market warnings of the past few weeks, the S&P 500 is still up nearly 100% over the past 5 years. *Source: Bloomberg, FactSet, Federal Reserve, Standard & Poor’s, Stategas/Ibbotson, J.P. Morgan Asset Management