Memo to Clients: Navigating Market Uncertainty Amid Tariffs
- Jonathan Harner, CFP®
- Apr 11
- 3 min read
Below is the memo I sent to my clients Friday, April 4th as the markets began to react to the tariff news. My clients found it helpful. I hope you do too! Weathering market uncertainty is not easy, that's why we are here to help.
As you've likely seen, the tariffs have arrived, and the markets have reacted accordingly. I've spoken with many of my clients. They hold a variety of opinions about how successful tariffs will be in the long-term. Some believe tariffs are the exact tough medicine our country and economy need to thrive in the long run. Others see them as a poison pill that could bring disaster. Time will tell. But since our crystal ball is still broken, all the forecasts and predictions about how good or bad tariffs will be remain guesses about an uncertain future (note: the future is always unknown and uncertain).
As tariffs went into effect this week, the markets reacted quite strongly, primarily due to the uncertainty created by these tariffs. Markets hate uncertainty above all else, and tariffs are a wrench thrown into the complex machine we call the global economy. When clarity returns, we expect markets will likely stabilize. Until then, volatility will likely continue.
Whether or not you believe tariffs are what our nation and economy need, let's remind ourselves of some things we know to be true…
Companies Adapt to Thrive: Companies exist to make money, and they have proven to be remarkably resilient. Faced with tariffs or any economic disruption, businesses don't simply close their doors. Instead, they adapt. They find new ways to operate profitably, even if the transition takes some time. History shows us businesses continually evolve to serve their customers and reward their shareholders, regardless of changing economic or political conditions.
Market Corrections Are Common: In the last 45 years, often than not, we've experienced market downturns of greater than 10% at some point each year. The years we didn’t there was still a significant downturn just not quite of the same magnitude. Each time for different reasons. Each time, we've heard the prophets of doom predict the end of the world, yet predictions of the world’s end have thus far been greatly exaggerated. The world continues on, markets rebound, and long-term investors benefit by staying the course. While volatility can be scarry, it's the price we pay for long-term wealth creation.
Diversification Provides Stability: This is exactly why we diversify your portfolio. Right now, about two-thirds of the positions we use in our portfolios have gained value year-to-date, despite market challenges. Diversification across asset classes, sectors, and geographies helps mitigate the impact of any single economic factor like tariffs. It helps prevent selling assets at depressed prices to meet your retirement income needs.
Rebalancing and Reinvestment: Market downturns create opportunities. When markets dip, we rebalance to sell assets that have increased in value and buy assets that are undervalued. Put another way we take advantage of opportunities created by well-diversified portfolios to sell high and buy low. Furthermore, dividends and interest payments continue to flow, enabling us to reinvest and purchase assets "on sale." Over time, these disciplined actions enhance your portfolio's resilience and growth potential.
Beware of False Prophets: I think everyone has a family member, co-worker, or neighbor who has “predicted” this drop. They are likely trumpeting their success now leaving you wondering if you should have listened to them. But if they are anything like every other false prophet I’ve heard, they conveniently omit the countless other times their predictions were wrong. Ask these same individuals what time on what day to reinvest, they won't know. Tune out their noise. Remember a broken watch is right twice a day.
Resilient Investors Thrive: Remember, you are not among those who shrink back out of fear. Rather, you are part of a courageous few investors who understand volatility as part of the journey and who steadfastly stay the course. Volatility is just the price of admission to participate in long-term wealth creation.
In uncertain times, it's easy to get caught up in fear. The media loves times like these because they can prey on their audience’s anxiety. Remember, uncertainty is nothing new.
The future is always uncertain. We’ve weathered similar market storms in the past. Every storm has been brought on different reasons, but each time, disciplined investors who stayed focused on their long-term plans emerge stronger.
I realize all of this may still feel unsatisfactory for you. So, as always, we're here to discuss any concerns you may have or revisit your financial plan. Feel free to reach out anytime.
You don’t have to go through market volatility alone. If you found this helpful, schedule a call with us to see if you are the right fit for our services.
