Seven Days
The Trump Administration Tariffs were announced after the market closed on Wednesday, April 2. Since then, we have had seven trading days in both the stock and bond markets. What a week it has been! Let's review where we are as of the market close on Friday, April 11th.
Since the tariffs were announced, the U.S. stock market (as measured by the S&P 500) fell by over 12% in 4 trading days before rallying mid-day on April 9, after the administration paused reciprocal tariffs for 90 days on most countries (China being the big exception). The April 9th relief rally was the largest single-day rally since 2008. As we close out this week, we are now down approximately 5.5% since the announcement.
So, what is an investor to do in times like these, when the markets are being moved by news, tweets, and future assumptions about what might happen? We think it is best to review our fundamental beliefs about investing.
We are long-term investors.
We will always focus on your long-term success. While it can be very tempting to make changes in times of market stress, we know that staying the course has been the prudent thing to do. Our partners at Vanguard illustrate this in the chart below. 2008 was an uncertain time in the market, but those who stayed the course in a diversified portfolio were handsomely rewarded, as a 50% stock and 50% bond portfolio were up 225% through the end of last year. That is patience rewarded!
We are not forced sellers in times of market stress.
Bonds and cash are your friends. We invest in various investments, bonds, and cash as part of that allocation. The good news is that your cash in money markets is still earning over 4%, and bonds continue to be a haven in times of market stress. Because you have these “safer” investments in your account, we do not need to sell your stocks when they are down this suddenly. We will rebalance and make changes based on your long-term investment goals.
We customize your portfolios based on your goals and personal situations.
At Charter Oak, we get to know you and your unique situation. This allows us to understand your goals and invest to help you reach those goals. For some of you, this may be an excellent opportunity for us to rebalance and buy you more stocks. For others, this is a great time to remind you of the bonds you have in your account and how they provide you with stability and income. And for all of us, this is a good opportunity to revisit those goals. Has anything changed? Do I need to update my goals? We are here to have those conversations and update those financial plans.
What to do.
Many of our golfers and Masters fans may already know this, but the Masters Golf Tournament being played this week at Augusta National is one of the few places (maybe the only place) on earth that does not allow cell phones. Patrons, as the fans at the Masters are called, must check their phones before entering the tournament (courtesy phones are placed along the course for patrons to use in an emergency). The Wall Street Journal interviewed several of these patrons as they were leaving the course Wednesday evening, and all said how nice it was to get away from the noise of the last few days and not worry about the wild market swings and their portfolios.
We know this is easier said than done, but we watch your portfolio daily and stay committed to your long-term success. So, if you can, put the phone down, walk away from the computer and the news, and do something you enjoy away from the 24-hour new cycle. We will get through this together.
As always, it is our pleasure to work with you. Don't hesitate to contact your Charter Oak team with any questions or concerns.