Market Update 3/11/2025

Hello, StrongTower family! The markets have been fairly quiet since my 2022 post. OK, the markets are never really “quiet”, but they haven’t been overly-chaotic at least! But recent news and increased volatility warrants another “check-in” with all of you. Let’s dive in a bit to see what has been moving the markets in recent weeks.

My take on the recent volatility focuses on 3 things…

1. Moving fast: Since winning the presidential election, the Trump administration has been moving at break-neck speeds! This alone can be jarring to people as sometimes it takes time to process any kind of change. When people feel uncertain about where things are headed, they tend to become hesitant with their investment dollars. This, in turn, can lead to dips in the market.
2. Tariffs: The tariffs that have been put into motion recently have people fearful of possible trade wars. This can certainly disrupt company profits which, in-turn, disrupts the stock markets. This also affects investor confidence which can propel the markets down even farther.
3. Inflation: Fortunately, inflation has been kept in check in recent months. This is why we’ve been anticipating and receiving interest rate drops by the fed. Both of these things bode well for the markets. Unfortunately, some feel that the tariffs could lead us back into higher inflation as other countries respond with tariffs of their own. If this happens, then interest rates are not likely to drop for awhile, which is important for US companies to fund their growth efforts.

Are these fears warranted? President Trump has indicated that it may take some time for his policies to work in our favor. Honestly, it’s just too soon to tell. Be prepared to “buckle up” until the dust settles.

The Past 4 Months

Let’s take a look at the recent drop in the markets. Normally I show you the S&P 500 (via the SPY ETF) alone, but this only represents large cap stocks. I found it important to also share with you the Russell 2000, which represents small cap stocks. Look at the drastic difference between the two! In a time period where large cap stocks are down 5.87%, small company stocks are down 17.01%. This is why we like to spread across several asset classes. You just never know when one will perform vastly different from another. The drop experienced by large cap stocks is far from severe. These kinds of drops are quite common. The small cap drop, however, is much more significant.

The Past 12 months

When you take a step back to look at the past 12 months, you’ll gain a bit more perspective. Over the past 12 months, large company stocks are still up almost 11% despite the recent drop. Small company stocks are down, but by only 2%. By no means are these numbers that would normally cause concern.

Not too bad?

If the recent slide in the markets wasn’t all that bad, then why am I taking the time to write a market update? For one, we’ve been through some tough times in recent years. The gut punch from Covid, the massive rise in the markets due to money printed by the government, followed by the huge effects of inflation (due to the aforementioned money printed by the government), and the corresponding interest rate hikes have kept all of us “on our toes”. The media certainly doesn’t help much either with their sensationalism to get ratings. It is easy to grow weary from all the drama. We have faced difficult times!

Hang in there!

We may pop right back up… or we may have more drops to endure in the days ahead. No one knows. This is the inevitable way that the markets move. For our more experienced investors, you probably weren’t worried anyways, but we want to stay connected with everyone to help you process things as they unfold.

Opportunity

Don’t forget that drops in the markets also provide opportunity. Many of our savvy, experienced investors like to BUY while the markets are down. This is often referred to as “buying the dips”. We don’t know where the bottom of a market downturn will be, but we do know that today is a better buying opportunity than last week.

Summary

Buckle up because things might be volatile for a while. We recommend that you hold tight and not get caught up in the media hype. We will continue to watch over your investments with care and do our best to help you plan accordingly. We all want to be good stewards, which is why we recommend remaining steady even in turbulent times.

If you have any questions, please call. We are here to help!