Making Sense of Recent Market Volatility
Investors may be challenged to stay the course during this period of market upheaval. Let’s break down what this might mean for you.
The White House recently announced a new 10% baseline tariff on most U.S. imports and additional reciprocal tariffs pushing the weighted average to an estimated 20-25%. While investors had been anticipating the announcement, they were caught off guard by how aggressive it was. Some countries have indicated their intention to negotiate with the administration on lowering tariffs, while others have already begun announcing retaliatory measures.
It’s unclear how this all will shake out, but the risk of a recession has increased and market pricing is reflecting that accordingly.
What This Means For You
Moments like this are an important reminder that investing is a long-term endeavor. The market environment is variable; stock prices don’t only go up. It’s perfectly normal to feel concerned when markets drop quickly. It can be uncomfortable, and downright intimidating, to stay in the market when the world is in turmoil, but that’s an integral part of investing.
If you’re investing for long-term goals like retirement, making sudden changes based on short-term market movements can be perilous. A solid financial strategy is based on personal goals and time horizon – not day-to-day market swings.
Even though bear markets and corrections can stir up anxiety, historically, they are both shorter and have a lower magnitude than bull markets. Going back to the 1950s, the average bull market in the S&P 500 returned +77% versus the average bear market and correction return of -24%.
Moving Forward
We’ll continue to monitor these developments closely and share updates to help you make sense of them. And remember: market downturns may create opportunities for patient investors. Whether through dollar cost averaging, deploying cash held on the sidelines, or tax loss harvesting, investors have historically benefited from staying the course through volatile periods in the past.
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This information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Mario Ismailanji is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Form ADV 2A is available at www.sofi.com/legal/adv.