Are we liberated yet?

 

As we continue to deal with “unprecedented times” we now are facing a new wrinkle to the seemingly ever evolving market conditions of the past five years; what started with COVID-19 moved to supply chain constraints causing inflation then on to the first real interest rate hiking cycle of the past 40+ years and just when these conditions felt like they were behind us we are now firmly in the mist of Tariff Tensions and Economic Uncertainty.

 

The market is grappling with this heightened uncertainty due to ongoing tariff discussions and shifting geopolitical dynamics. While the U.S. government has raised tariffs significantly with the goal of reigniting the manufacturing sector and bringing jobs back to the US, the tariffs are more likely to bring on inflation, hurt the US consumer and slow economic growth not only in the US but Globally.

 

The Tariffs have are set to be heaviest on imports from China, and Europe; Canada and Mexico. It seemed Canada and Mexico were spared somewhat but both countries were still hit with higher levels on anything outside of the USMCA agreement. The full impact on consumers and businesses is still unclear. Fears of rising costs and disrupted global supply chains has caused markets across the globe to pull back rapidly over the past several days.

 

It is rare to see Investor sentiment at a point this low and historically such pessimism often signals the potential for a market rebound. Markets typically recover after sentiment reaches extremes and while we can’t tell if the bottom will be reached today/tomorrow/next month or next quarter, what we can be confident in is the fact that well run highly capitalized businesses will continue to grow their businesses and provide more goods and services than they have in the past. This will result in these businesses being more valuable in the future than they are today. “well run companies will continue to prosper”(sound familiar…?)

 

While the market is facing a challenging environment, I want to take the opportunity remind you, throughout the markets’ long history, there have always been reasons to hesitate when it comes to investing. From the Great Depression to the Cold War, the Cuban Missile Crisis, presidential assassinations, energy crises, oil price surges, housing meltdowns, and even a global pandemic – the news cycles have painted the market in a negative light over 90 times in the past century.

 

As you are certainly aware by now that we are firm believers in Warren Buffets Investing philosophy I will again borrow one of his quotes to leave you with:

 

“the stock market is a device for transferring wealth from the impatient to the patient”

 

This quote reflects the idea that, despite all of the reasons to be negative and all of the volatility we are seeing, the market will reward those who stay committed and allow their investments to grow over time.

 

As always we thank you for putting your trust in our team, we are always available to discuss your portfolio and answer any questions or concerns you may have.

 

Thank you,

 

Phil