The recent tariff announcements have brought renewed volatility to the markets in early April 2025. Here are Provista’s current thoughts and advice for clients and investors.
Continue to play the long game
Our investment strategy has always focused on long-term investment results, not short-term. Why?
- Because we are focused on putting the numbers in your favor.
You can see from the chart above why we believe the length of time in the market beats timing the market. Warren Buffett famously said in his 2021 letter to shareholders, “We own stocks based upon our expectations about their long-term business performance and not because we vie them as vehicles for timely market moves.” We couldn’t agree more.
- Reactionary selling has a real cost. The numbers here are staggering, as shown by the chart below from Ned Davis Research.
- You have to be right, twice. Most people recognize that market-timing is a fool’s game, but psychology can be a deceptive thing when markets are volatile. One of the many problems with timing an exit is also timing the re-entrance. Often when the markets rebound, much of the rebound is realized in a small number of trading days.
Focus on your plan, not daily account fluctuations
There’s a reason our motto is “Rest assured, we have a plan.” The financial plans we create for our clients assume multiple periods of market volatility, not decades of uninterrupted growth. We build those assumptions in and stress-test your plans repeatedly to make sure you’re on track to reach your financial goals, and these plans are designed to work within a range of scenarios, both good and bad. So rest assured, your plan has not been caught off guard by recent volatility.
What We Expect from Here
Our current take is that the recent volatility could hang on for a while. Major changes in global trade take time. Political negotiations take time, and they are likely to have several ups and downs before any sense of finality is reached. That being said, we do not recommend major investment changes based on anticipated future conflict resolutions. The reason is that market movements don’t always align with economic news.
For example, during the Great Recession, housing prices fell from 2006 until 2012. Many investors believed the best move was to wait for the housing crisis to turn around before getting back into the market. Here’s the problem. The stock market bottomed in early 2009, not 2012. In fact, waiting on that housing nadir would have sidelined your money while the S&P rose more than 50%.
What We Are Doing
Know that we are actively monitoring and repeatedly evaluating the holdings in our portfolios. That being said, we purposefully designed our portfolios to avoid the need to be reactionary. As opportunities present themselves we will work to take advantage of them, but you can be confident knowing that we are not making any knee-jerk reactions.
Tax-loss harvesting – In taxable (non-qualified, or non-IRA) accounts we are looking for opportunities to harvest losses for tax purposes. Many of you have positions out there that have been waiting for this opportunity, and we are looking to capitalize as much as we can.
Roth Conversions – For many of you this is a great time to do Roth conversions from your traditional retirement accounts as we can potentially get more bang for our converted buck.
Putting cash to work – For those of you with cash on the sidelines, we see this as a buying opportunity. Depending on the situation we may also dollar cost average cash into the markets.
Tips for Investors
- Don’t helicopter parent your account balances. Some things in life aren’t meant to be checked every hour. You wouldn’t plant a seed and then dig it up every hour to see if it’s growing yet, and you wouldn’t judge your team’s season based on a single game’s score at halftime. Go enjoy your day and trust your advisors to watch your back.
- Limit your news media consumption. Keep in mind that media companies’ primary goal is to sell views to advertisers, not give you sound advice. Their most profitable moments come from negative news and fear. If negativity can be overhyped, you can count on the media to do it.
- Don’t make emotion-driven investment decisions. Our Director of Client Experience, Jason Buckley, has put out several articles and videos in recent months on the psychology of money. They are a great resource and reminder of why we don’t make rash decisions in emotional times.
- Remember history. We have all been through this before, multiple times. I know getting peppered with excited headlines about markets isn’t the most relaxing environment. So remind yourself, you’ve been through this before. Your advisors have been through this before. This time is just the latest example we’ll use in similar future charts.
Final Thoughts
I’ll leave you with a couple timely quotes that I hope you’ll take to heart.
“Time is your friend; impulse is your enemy.” – Jack Bogle, founder of Vanguard
“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” – Seth Klarman, billionaire investor and founder of the Baupost Group