Good morning, happy Monday & happy Easter!
“The true investor welcomes volatility … a wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses.”
– Warren Buffet
Holy cow! What a crazy couple of weeks!
I’ve rewritten this memo about a dozen times. Every time I finish my thoughts and go back to proof-read & re-read the next day… the news has changed, and I had to start again.
This was a rapidly changing market we are currently in, and it has been hard to communicate real-time information because of how quickly things were changing.
But, before I start my remarks today, and I have quite a lot to say, let me first start by saying I have the best client base in the world! You are amazing!
Not a single one of you bailed from your plan. I know a few of us had conversations about concerns, but you stuck it out. I am so proud of you! I feel like a dad whose kid just hit a home run in Little League 😊. Great job!!!
I know it’s not been easy, but you are doing the right thing.
A mere 55 days ago (February 18th) the S&P 500 closed at a record high. All seemed like it was going well.
Then Donald Trump starts talking about tariffs and you would have thought a nuclear bomb went off.
From February 18th to April 8th the S&P 500 was down almost 19%, including a just over 12% drop in the 4 trading days from Thursday, April 3rd – Tuesday, April 8th.
Then on April 9th the S&P 500 goes up 9.5%, it’s 3rd biggest gain since the post-World War 2 area.
Thursday and Friday were not boring market days either. It feels like quite a roller coaster recently.
The majority of these fluctuations were all about tariffs and their effect on the economy.
If you believe in Donald Trump, as I know many of you do, then you likely are concerned but not panicking because you trust the administration behind these moves.
If you loathe Donald Trump, as I know many of you do, you likely were infuriated by the actions which only reinforce your perception of him.
This is a perfect example of why all of us should divorce our politics from our investments. The market only cares about corporate profits & growth. Please understand this no matter who you vote for or who sits in the White House… This was true a year ago under Biden and it will be true 4 years from now no matter who resides at 1600 Pennsylvania Ave.
Ok, so I’m going to make a prediction here, something I rarely do, as you know. I most certainly could be wrong, so take this with a grain of salt. But I believe that 6 months from now tariff talk will hardly be a news headline and there will be many other issues, financial and non-financial, that are grabbing our attention.
So, the big question we all have is … where do we go from here?
There is only one honest answer: we don’t know.
I know that is not the answer you were wanting, but it is the only truthful one.
We as investors are trading certainty for something so much greater.
If you want certain you go with a savings account, a bank CD, or a fixed annuity. These are very viable alternatives for some people at some times. You get your 2%, 3%, maybe 4% guaranteed rate and go on your merry way understanding that taxes and inflation will erode the majority of true gains… You are simply treading water with these strategies (again, I am not knocking them).
And then there are the rest of us. Those of us who believe the great companies of the United States and the world have revolutionized humanity… and have made money by the truck loads in doing so. These companies are addressing some of the greatest challenges we face and providing us services we didn’t even know we needed (How long can you go without a smart phone or an Amazon order these days?).
These companies continue to evolve with the primary objective of providing profit to their owners. The amazing thing is those owners are us through equity ownership.
Owning a business is hard (I can speak from a place of personal experience on this) … but the benefits owning a business are worthwhile.
With this market downturn the profitability of Intentional Wealth has temporarily decreased. When you hurt, so do I. I would have it no other way.
Does that mean it’s a bad business? Does that mean I should sell? Does that mean the business is in trouble? No, no, and no. It simply means revenue is down for a period of time. It’s happened before, and I have every confidence that it will happen again. I wouldn’t dream of selling just because of a temporary reduction in revenue and profit… that would be exceptionally short sighted and foolish.
Being a business owner requires some thick skin. You are experiencing that right now. Take your lickings but stay in the ring.
Congratulations to the Florida Gators basketball team for their national championship win last Monday night. Their last handful of games before hoisting the championship trophy were nailbiters. They were losing fairly dramatically in the last two games they played, but they rallied to be victorious in the end. You can’t quit the game if you want to be victorious.
How we respond during times like these doesn’t simply reveal our willingness to tolerate fluctuations … it reveals our beliefs. If we believe companies will continue to grow, flourish, and change the world then stay invested … even when it’s hard.
I gave my 13-year-old son a book recently called “Do Hard Things.” The book challenges young people to pursue meaningful and worthwhile endeavors in their lives… and the only way to accomplish such things is to do hard things.
The same applies here and now. I know it’s hard, but please stay the course… I fully believe a future version of you will thank the current you for being patient in times like these.
We are here if you need us. Please call or email, we look forward to hearing from you.
Make it a great week ahead!