These days, it is hard to ignore the news. Terms like tariffs, inflation, rates, volatility, trade, and deficit dominate the headlines. We want to touch on two issues: the ongoing discussion about tariffs and the recent market volatility.
As you read this, please remember that we are closely monitoring the situation. Although these headlines may be unsettling, we remain focused on long-term thinking and careful portfolio management. If you have any questions, please don't hesitate to contact our team. We're here to help and discuss anything on your mind.
Tariffs
Tariffs are essentially taxes on goods imported from other countries. The government uses them to protect domestic producers from foreign competition, among other things. The current situation resembles the US-China trade wars in 2018 during President Trump's first presidency. At that time, President Trump introduced new tariffs on China, prompting China to retaliate with its own tariffs—similar to what happened this past week. This led to stock market volatility in 2018, and we are witnessing a similar market reaction this year as President Trump announced new tariffs on China, prompting China to impose a reciprocal tariff.
In 2018, the G20 meeting led to productive and positive talks between China and the US regarding tariffs, which contributed to an excellent year for the stock market in 2019 (with the S&P 500 increasing by 28.9%). As we look into the rest of 2025 and beyond, it is still too early in the tariff talks to predict the outcome. Unfortunately, only time will tell.
Market Volatility
As illustrated below, there are always reasons to be apprehensive about the market. Market volatility and risk are the costs associated with achieving long-term returns. The chart below shows the S&P 500 alongside some historical events, highlighting that while there are numerous frightening times, taking a step back reveals an overall upward trend in the market.
Historically, it has always been wise to focus on the longer-term picture.
For anyone who has ever met with us during a stock decline, you may recognize the slide below. Looking back at the historical context, it shows another view of the market. The grey bars show the calendar year returns of the S&P 500 since 1980. The red dots show the declines that happened sometime during the year. As you can see, intra-year market declines are quite common and occur for various reasons. It's important to note that historically, the market has recovered and done well in many years.
Markets can be unpredictable in the short term—prices can swing wildly from year to year. But when we zoom out and look at 5, 10, or 20-year periods, the range of returns narrows, and the odds of positive returns increase. That’s why long-term investing has worked—it helps cut through the noise and focus on what matters.
We understand that the current market volatility can be frightening, and the constant negative news doesn't help. Please remember that we are here for you to discuss any concerns, thoughts, or ideas to help you achieve the best long-term financial situation. Don't hesitate to reach out to us anytime!
Data and analysis does not represent the expected future performance of any investment product or strategy.