In my last market update, I suggested that everyone “buckle up” for a potentially bumpy ride. Unfortunately, the extreme volatility has been realized. I thought it would be a good time to reconnect with you all and share some perspective.

What’s going on?

First, let’s look at what has been driving the markets over the past few weeks. The Trump administration has been busy threatening and enforcing trade tariffs. The size and scope of these tariffs has been enough to generate plenty of chaos across the globe. Many fear repercussions that could lead to trade wars aimed at the US. What is strange about the current market decline is that it isn’t the result of a surprise shift in the economy. Rather, it is a measured step being taken by our country’s leadership in hopes of a better long-term financial result. So, will the end justify the means? It is too soon to tell, but we are being asked to be patient as the short-term loss will be worth it when we see the long-term gains that will result.

Perspective on the Drop

It can be quite difficult to maintain objectivity when market drops occur because the media loves to sensationalize things. Times like this are when you want to take a breath, look at historical timelines, and see just how severe the downturn has actually been.

For the S&P 500, the top was 2/20/2025. From then through April 17th, the S&P 500 is down 13.98%. Is that a sizeable drop? Yes. Is it highly unusual for the markets to drop this much? No. In fact, we saw sharper drops within the past 5 years. During Covid, we saw a 30% drop in 2020. In 2022 we saw about a 25% drop. To have three such drops in 5 years feels a bit unfair. Mix that in with inflation and higher interest rates and you end up with a timeline that has indeed been difficult for people. So, while these kinds of drops are not uncommon, they can take their toll on people. Hang in there!

Below is a view of the S&P 500 from 1/1/2019 through 4/16/2025. Notice the three drops we have had identified in red. Despite this, the S&P 500 is still up 132% during this timeline.

What is StrongTower Doing About It?

First, we are not panicked by the current environment. We are seeking to make wise, objective decisions with your investment dollars. When the markets take a hard directional change, we look for opportunities via a tactic called “rebalancing”. This is a process of moving funds from asset classes that are currently relatively high in comparison to others. For example, many of our clients have bonds that are holding up fine right now. This means they have too much money in bonds, and not enough money in stocks. This allows us to take advantage of the downturn to buy stocks that might be under-valued at the moment. We will continue to monitor the situation and make these kinds of shifts when they seem wise.

Second, we are open for business and ready to meet with you. If you want to take a second look at your retirement forecast, schedule an appointment with us. We want to be sure you’re still on track for your important life-goals. This means we need to roll up our sleeves and get to work!

What Should YOU do About It?

This question depends on your current state of life. Consider the following two scenarios:

1. You’re Still Saving for Retirement: If you’re still in your “accumulation years” of saving for retirement, my advice is usually “buy more!” When stocks are low, this is an opportunity to buy at better prices than usual. No, we don’t know where the bottom will be, but it’s nice to be able to “buy the dips”. So, if you’re able, consider adding to your investments before the markets rebound.
2. You’re Already Retired: If you’re already retired and taking withdrawals from your investment accounts to live on, the scenario is different. As long as you’ve been well within your “safe zone” of withdrawal rate, you’re likely still in good shape. If, however, you’ve been “pushing it” on the withdrawal rate, a market slide like this is a good time to take a close look at your current situation. For example, if your retirement forecast showed you at an 80% chance of success rather than 95%, let’s pause, roll up our sleeves, and rework your plan. Let’s be sure you’re still on track. Sometimes we need to “roll with the punches” and make adjustments in challenging times. This sometimes requires us to “tighten the belt” in order to lower withdrawal rates during difficult economic conditions.

Summary:

The recent market drop has been sharp and fast, but it hasn’t been as severe as the media portrays it. A rebound can occur at any point, so try to be patient to recapture an upswing. Most of you will be able to adapt through the storm without need for significant changes. If, however, you’ve been pushing the boundaries a bit on your withdrawal rate, you’ll want to give some careful consideration to making adjustments now to help your overall long-term situation. Your StrongTower team is here, ready to work for you and help you through it all!