Prospective 1 – Back to the norm – Market volatility: I have been involved in the markets since 1985. The very first crash that I experienced was Black Monday, October 1987. Those investors that were steadfast came out fine. We went through the banking or savings and loans crisis in the late
80’s. The dot-com bubble in the late 90’s and the terrorist attack on the U.S. soil in 2001. Then there was the great recession in 08, and more recently the Covid crisis we are just coming out of. During each crisis, the markets showed extreme volatility but with great resilience.
Prospective 2 – Time tested returns: With each and every crisis that we experienced, many thought the world was coming to an end, but the markets
proved us wrong. Free enterprise prevailed, investor’s wealth was reestablished, and markets continued to outpace savings accounts, bonds, cash or cash equivalents.
Perspective 3 – We have officially reached a 10% correction: How often does a 10% correction occur? According to Fidelity Investments under a Google search, corrections occur more frequently than crashes. On average, the market declined 10% or more every 1.2 years since 1980, so you could even say corrections are common. Again, it’s not clockwork, but that should help you put things in context when the market drops (March 10, 2025).
Perspective 4 – Tariffs are not the end of the world: Given time, the commencement of tariffs may bring back American ingenuity, manufacturing and lower our trade deficit. These new tariffs may also create jobs and lower inflation while boosting the gross domestic product (GDP). They may also help bring down the 37 trillion-dollar deficit America is currently experiencing.
Perspective 5 – Tariffs may not go as predicted: The fears that tariffs may not produce the projected results are creating uncertainty. The fears that tariffs may cause increased inflation, may cause a recession, and may slow GDP, is wreaking havoc in the marketplace. The unknown or uncertainty is why we see such volatility. Markets do not like uncertainty. Any clarity and I expect the markets to excel once again.
Perspective 6 – A case for diversification: International markets appear to be doing just fine. Commodities seem to be doing just fine as are Real Estate
Investment Trusts (REITS). Money markets funds are paying around 4% as are T-bills. Having money on the sidelines to meet your distribution goals and investing during volatile times has proven to be a good strategy. Take away – Do not let today’s headlines affect your long-term investment goals.
As always, if you have questions, or concerns about how today’s headlines may affect your personal investment portfolio please reach out.
Sincerely,
Tim Vorpahl
President,
Vorpahl Wing Securities, Inc.