Why Discipline Beats Market Uncertainty

What a week this has been for investors across the world dealing with the uncertainly of Donald Trump and his ‘tariffs for the world’ strategy. This has continued to create chaos around the globe as countries, companies and investors try to understand and react to how these tariffs are going to affect them in the near future.

There are many famous sayings about the stock market that have stood the test of time, and one age old adage for stocks that you have heard me site often in times like this is that “Markets Hate Uncertainty!” and that certainly holds true to form today.  Imagine trying to navigate a boat or a ship on the seas and all of a sudden, the fog rolls in and you cannot see beyond the front of the bow.  Without proper tools, proper vessel and lack of preparedness, you would be hard-pressed to know what to do next as you cannot see the terrain in front of you.  It’s the same idea when investing in stocks.  When a fog rolls in like tariffs for the world and there is no playbook as to what to expect next, investors will definitely look to err on the side of caution and be more protective and less risky when they don’t know what is around the corner.

This uncertainty creates fear, justifiably because we don’t know if the market downturn will last a long time or as we saw on Wednesday’s historic rally when it went up over 9% in one day when Trump backed down from Tariffs, for the time being anyways.

All to say that in times of extreme uncertainty, such as now the goal and focus should be to look at what works best in times like this and that is to always stick to long-term fundamentals that have served investing for over 150 years.

We will always look to history when educating our clients as well as attempting to predict the future when it comes to investing. We have included some charts and visuals below to help you understand why long-term fundamental investing works best and what to expect when the market has a setback such as it did this past week and how quickly it can recover as well.

Pureposeinvest.com

What history shows us is that the stock market has a substantial drawdown every 2.5 years and so staying the course during downward volatility is rewarding in less than a year later, in most cases.

As always, we are here for you to answer any questions that you may have and hope that this helps you get through the tough times that we currently face and will also face in the future as the months and years go by. 

I leave you with one last word of advice and encouragement and that is that bear markets are inevitable, but so is the recovery!