President Trump’s tariff policy and the subsequent market correction have many investors on edge. Market corrections can be uncomfortable, and the cause of each may be different, but market declines and eventual recoveries are something investors have been through time and time again.
We realize during this period of unsettling news headlines and market volatility, you may have questions about what actions to take given the uncertainty ahead.
Every market correction has its unique characteristics. Currently, investors are navigating markets reacting to President Trump’s new tariff policies. As of the market close on April 4th, global markets were down over 13% from their all-time high reached in mid-February as measured by the MSCI ACWI IMI index (FactSet). Such declines (and volatility), while concerning, are fairly common and occurred most recently in 2020 and 2022.
These corrections are often short-lived. Even the pandemic-induced bear market of 2020, despite its severity (30%+ decline), saw markets recover to previous peaks in less than three months. However, longer corrections and bear market cycles do occur periodically and are actually part of a healthy economy. This is precisely why these market cycles are built into Abacus clients’ financial plans.
At Abacus, we are closely monitoring the markets and developing events, while grounding ourselves in historical perspective. Companies have repeatedly demonstrated remarkable resilience during extremely challenging periods like the Oil Embargo of the 1970s, the Dotcom crash, and the 2008 Global Financial Crisis. What history teaches us is that each crisis feels uniquely threatening in the moment, but for well-diversified long-term investors, staying the course has consistently proven rewarding.
Over longer timeframes, fundamental factors like economic growth, corporate earnings, technological advancement, global conditions, monetary policy, and demographics drive returns more significantly than shorter-term events such as political leadership changes or indeterminate temporary tariff policies. Companies persistently pursue profits regardless of who occupies the White House.
Consider how businesses responded during COVID-19: They rapidly adapted by transitioning to remote work, accelerating digital transformation, and reimagining supply chains. Similarly, companies are already developing sophisticated strategies to navigate the new tariff environment – restructuring supply chains, implementing strategic pricing adjustments, pursuing cost-cutting innovations, and engaging in targeted advocacy efforts. This remarkable adaptability is precisely why markets tend to grow over time despite periodic policy disruptions.
We understand the anxiety that the 24-hour news cycle can generate, and we’d like to remind you of an important question to reflect upon when panic threatens your investment strategy:
Have your long-term goals changed?
If your answer is “no,” chances are there is no reason for your investment plans or allocations to change either.
As long-term, disciplined investors, we will experience bad market days and bad market headlines over the span of our investment time horizon. Setbacks like we’re seeing are temporary, and the potential for permanent loss occurs when one chooses to sell. Remember, there are far fewer bad market decades and the long arc of market history trends towards growth. You and your advisor have made thoughtful long-term plans for your future. It’s important not to let short-term anxiety derail you.
In fact, on days like we’ve recently experienced, when many in the market react to their emotions, our Abacus trading team steps in to buy shares at relatively low prices through our disciplined rebalancing process. Our team is staying the course on plans laid out with our clients.
If you are feeling anxious about your investments or financial plans in general, consider:
- Calling your Abacus Advisor directly and reviewing your long-term strategy or simply “talking it out.”
- Shutting out the “noise” by turning off the television or closing your web browser.
- Take a walk, pick up your favorite book, or read our blog post Find Peace with Money through Mindfulness
- Stocks are a better buy today than they were at the market high.
- If you can’t turn off the news cycle, be selective of which sources you choose to watch and ensure they’re reputable.
We welcome your inquiries around this issue, or any other concerns you may have. We are grateful for the trust you place in our team and for allowing us to help you expand what’s possible with your money. We are here with you each step of the way.
