“Businesses, as well as individuals with desired talents, will usually find a way to cope with monetary instability as long as their goods or services are desired by the country’s citizenry…Lacking such assets as athletic excellence, a wonderful voice, medical or legal skills or, for that matter, any special talents, I have had to rely on equities throughout my life. In effect, I have depended on the success of American businesses and I will continue to do so.” – Warren Buffett in the latest Berkshire Hathaway Shareholders’ Letter
Last week, the Trump Administration announced a significant increase in tariff rates, which led to heightened market volatility. A tariff is a tax our government places on imported goods from other countries. While there could be some potential benefits to these changes, if the higher tariff rates remain in place, uncertainty about future prices could continue and pose a risk of an economic slowdown.
Markets dislike uncertainty, which is why they are currently reacting to the news of the tariff increase—not because of any immediate collapse in the economy or corporate earnings. Often, markets react impulsively to headlines and take time to analyze the full picture. The Trump Administration has already started negotiating with other countries in an effort to lower tariff rates. However, these discussions could take months to resolve and may continue to create volatility in the meantime.
While this level of volatility can be unsettling, it’s important to remember that it’s not unusual when viewed in the context of history. On average, the stock market experiences one correction of this magnitude every twelve months. Over the past 100 years, every stock market correction has been followed by a recovery. While market fluctuations can feel alarming in the moment, they are a natural part of the investment cycle—and successful long-term investors have learned to weather them.
We don’t claim to know exactly what the future holds, but we remain confident that your portfolio is well-diversified and comprised of quality investments. Your investments are not based on speculating about the next headline, but in businesses and entities that play a key role in our daily lives.
If you have any questions or would like to discuss anything further, please don’t hesitate to reach out. We truly appreciate your continued trust in us.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. Past performance is no guarantee of future results.