April 2025
Share
Understandably, there is a lot of confusion and worry from investors about this market. Now that we know the tariff plans, we stepped back this past weekend to review the bullish case for stocks and the bearish argument
The market isn’t as bad as the index performance implies and it’s not a total market wipeout. Defensive sectors (Healthcare, Utilities, Consumer Staples) are flat to slightly down year-to-date. Tech and consumer stocks are getting crushed, but this market remains far from a total wipeout that we see in a typical bear market. The index declines aside, this is still a market that’s rotating from Tech and consumer names to the rest of the market, and that’s encouraging.
The bearish argument being made is:
1) It’s the 1970s again (rampant stagflation driven by a huge policy error)
2) The market is still overvalued
3) The Trump Put exists but may be in the low 4,000s in the S&P 500. So down around 20% from here.
We are not declaring this a bearish game changer, because the bullish argument is more compelling in the medium/long term (three-to-six months and beyond). There are economic positives looming in the future with tax cut extensions and de-regulation. The current market calamity is very different from two recent ones (the pandemic and financial crisis), in that it is manufactured by government policy. We will continue to watch this market closely, but for now we are not rebalancing our portfolio models to more cash. As the trade issues are worked out, the market is likely to “roar” back. As of this morning most of our clients’ portfolios are down around 7 – 10%. This is compared to the S&P 500 down 13.42%, Dow down 9.53%, and Nasdaq down 19.28%.
If the direction we are taking is a concern to you, please email or call us.
Thank you,
The Advisors at Bane O’Leary, LLC
Share
