I’d like to share some perspective on recent market developments and what it means for your financial plan. This comes at a remarkable time given the major changes in policy and investment markets.
The key takeaway is that diversified portfolios have shown impressive resilience given the challenging market period we’ve just experienced. We have every reason to remain confident about the long term.
I hope you value these perspectives as a timely update. If we can help you at this time, please don’t hesitate to contact us.
Summary of Key Financial Developments
Above all else, I want to help you cut through the noise by summarizing the important developments in simple terms. Our focus is to provide context on recent headlines and share what we believe matters as long-term investors.
- Investment portfolio snapshot. April proved to be a month of significant updates, starting with the April 2 tariff announcement and ending with a stalling economy. Yet, you might be pleasantly surprised to hear that diversified portfolios generally held their ground.
- Stock and bond volatility. If you’ve been following the headlines, you’ll know stocks and bonds have been more volatile than usual. That said, resilience has been a key feature of the assets in your portfolio. For instance, the S&P 500 fell as much as 12% in April, but the index rebounded and closed within one percent of where it started. Our approach of balancing risk and opportunity becomes a strength in environments like today’s.
- A mixed economy. The U.S. economy is showing mixed signals in early 2025, with some concerning data points alongside areas of resilience. One of the key concerns among investors is whether tariffs will drive inflation higher and growth lower. The latest reports show the economy contracted slightly (by only 0.3%) in the first quarter of 2025 – the first decline since early 2022. This happened mainly because businesses rushed to stockpile imported goods before tariffs took effect.
- U.S. and China tensions. Trade tensions are set to be an ongoing issue. The situation around policy negotiations are still evolving, although the 90-day pause in most countries suggests that the worst-case scenarios may be less likely. From a financial viewpoint, a wide range of outcomes needs to be considered and the relationship with China is likely to be a longstanding challenge. Overall, progress on tariffs is encouraging, but it is important your portfolio is capable of navigating different scenarios.
- Interest rates are still likely to be cut. The mixed picture makes the Fed’s job more difficult. With the Fed “on hold,” we’ve seen President Trump and Fed Chair Powell clash over the right path ahead. Regardless, the path of interest rates is still likely lower, with the markets expecting the Fed to cut rates about four times this year, possibly beginning in July. This is generally still a positive for investors.
- Diversification and portfolio positioning. In a volatile environment, diversification has helped since we have a mix of assets that can play offense and defense. Of note, international exposures have done well, and bonds have supported portfolios with relatively healthy yields. Market volatility often results in attractive valuations across many asset classes, offering potential opportunities in search of greater diversification and balance in portfolios.
Maintaining Long-Term Perspective
As Warren Buffett once said, “The stock market is a device for transferring money from the impatient to the patient.” In the face of recent challenges, one investment principle remains clear: staying invested through periods of volatility has historically been important for long-term financial success. Markets are inherently unpredictable at times, and we never expect them to move in straight lines.
That said, we don’t expect months like April very often either. While increased volatility can be unsettling, it’s in times like these that focusing on your financial plan, portfolio construction, and areas of opportunity is most important. This means we adjust when necessary, avoiding unwanted risk, but also stay disciplined and diversified in a way that is appropriate for your circumstances.
Naturally, the future carries uncertainty. Without a crystal ball, our best approach is to balance risk and opportunity using techniques like diversification and risk management to support your portfolio through historic periods like we experienced in April.
As always, I’m available to discuss how these developments might relate to your specific financial situation and goals.
Best regards,
Katie Weibel
CFP®, MBA®
Financial Planner & CEO, Haven Financial Planning