A Quick Recap of What’s Going On
Last week, I shared a video walking through what’s driving this market pullback.
On one side, the U.S. government is working to cut expenses. On the other, the administration is focused on raising revenue—primarily through tariffs, taxes, and trade.
They’re working to rebalance global tax and trade structures—what U.S. companies pay foreign governments versus what foreign companies pay here. There's also a clear push to reduce how much the global economy draws from the U.S.—still the world’s largest economic engine and consumer market.
So… The Markets Are Crazy. What Do We Do?
Let me take you back to early 2020.
The market dropped nearly 40% in six weeks. We responded by moving a third of your conservative, liquid assets into equities. I said if the market fell further, we’d do it again—and again.
As it turned out, the market bottomed right around that first move. That measured, disciplined approach—used again in 2008—is exactly how we’re thinking today.
This is not the end of the Great American Experiment.
In fact, with AI and millennials entering their peak earning years, the next 20–30 years could be stronger than the last 30.
What We're Seeing Now
Markets are reacting emotionally to uncertainty.
Floating rate debt is falling in value while interest rates on it rise. Safe-haven government bonds are seeing inflows, pushing yields down. But bank loan debt is weakening—raising the risk of a credit crunch.
We’re watching that closely.
What Are We Going to Do?
1. We’re Taking a Breath
We’re not making rash moves.
We’re not shifting large portions of your net worth into cash—unless you call and ask us to. Why? Because we own high-quality, cash-flowing businesses, and we’ve kept tech exposure balanced.
If you have years to retirement, you have time—and the market will recover.
This market isn’t trading on fundamentals. Corporate earnings remain strong. Jobs are up. Rates are trending down. We’re not in a 2008 or 2020 scenario—we’re in a period of elevated uncertainty.
2. We’re Looking for Opportunity
We’re well positioned, and we’re seeing chances to lean in:
- Fixed index annuities have shielded us from bond volatility.
- Dividend-focused stocks stayed flat year-to-date until just this week, while tech took a major hit.
- Portfolios aren’t down in line with the market—because we’ve stayed disciplined.
Now, we’re acting in three areas:
A. Deploying Liquid Capital
We’re moving cash, bonds, and annuity withdrawals into equities where value is compelling.
B. Shifting Equity Allocation
We may trim dividend-growers and add to quality tech and other names that have been severely marked down.
C. Adding to Floating Rate Bonds
This is where disruption creates yield—sometimes 10–20%—as bond prices drop. We may increase our exposure here.
Watching the Tariff Talks
We’re already seeing some positive signs.
Several countries are coming back to the table, willing to talk about tariffs. Maybe we go to 10% back and forth. Maybe we get 0% on some goods. There’s even discussion of large free-trade zones—U.S. and Europe, U.S., Mexico, and Canada.
These things are on the table. That’s encouraging.
A Word to Our Clients
If you’re retired, rest easy—we’ve protected the next 12–18 months of your cash flow. That money is secure.
If you’re nearing retirement, we’re planning with this volatility in mind. You are not navigating this alone.
In Summary
Here’s what we’re doing:
- Taking a breath.
- Looking for an opportunity.
- Repositioning—adding a bit more octane where appropriate.
These are the moments when markets give us a chance to buy great companies at great prices. This is not the end of the American experiment. Markets will reach new highs—we don’t know when, but we’re positioned for it.
So, sleep well. Turn off the news if it’s raising your blood pressure.
We are here to help you accelerate your vision for your future, and we're here to help you make great decisions within your portfolio.
Thanks again for the trust you place in us.