I wish I had something new or particularly insightful to say today but the more things change, the more they remain the same. Tariff pauses, new tariff threats, the only constant is the inconsistency and unpredictability of trade policy. Through it all, somehow, the markets have remained surprisingly resilient. Investor confusion, however, seems evident - the markets open down meaningfully, then slowly climb back up as the day unfolds...and the next day, the market sports ever better gains as the day unfolds only to fade in the last hour to close flat. In surveys, investor sentiment remains negative. On the other hand, at the recent CNBC hosted CEO Summit, CEO's seemed relatively unfazed by all the drama and mainly positive on their prospects…

I went into the local hardware store earlier this week to buy a metal bracket to hang a garden hose. While waiting in line, I turned the bracket over to check the price. Instead, what I found was familiar - a ‘Made in China’ label. No tariff problem for me. Then I went back to work – much more pleasant lately.  Markets had rebounded from recent steep declines…the trade war and a potential recession clearly not an investor concern. Life appears to be carrying on…for the moment, anyway…

The last time we found ourselves together in this space, the subject line conveyed a simple message – ‘Too late to sell’. It was true…and good advice. Staying invested was rewarded. The market has reversed course, regaining about half the decline from its peak. And yet, investing in the markets these days remains a precarious endeavor….

Managing money is not the easiest of jobs these days. The market averages have declined significantly from their peaks. Of course, that has happened before. It's never pleasant though not especially unusual or alarming. (In 2022, the S&P500 declined 18% from its peak in a few months…it is down just half that much now.) The Trump administration’s proposed and enacted tariff policies and threats are also not unprecedented nor should anyone be surprised - Trump’s first term featured tariffs as a major policy initiative as well….

On Thursday, the S&P 500 entered correction territory, defined as a decline of at least 10% from its peak. That peak was reached only in mid-February, less than a month ago. The other major averages have suffered similarly. A decline like that is not a shocking turn of events or even surprising…particularly after the last two years’ substantial gains. Valuations were stretched as we’ve commented before. Often that is accompanied by a rise in speculative investing – e.g. meme stocks, quantum computing companies, and marginal crypto tokens. The decline was/is a reminder to investors that, in the end, share prices have to have earnings underpinnings, legitimate growth prospects, and a clear path to ever growing profitability…

The markets had a bad week, putting a cap on a difficult month. That the averages turned down shouldn’t have come as a surprise following two years of 20+% gains and a further rise at the start of the year. It was a set up for at least a bit of a reversal. With consistent equity gains over a prolonged period of time, it is easy for investors to become complacent….