The Flash Crash
What a quarter! That’s all I can say… The financial markets really gave us the full range of emotions from hopelessness and despair to newfound optimism. In just two months, we narrowly avoided an economic catastrophe to rally to new all-time highs.
What happened?
The US stock market (S&P 500) took the ultimate knockout blow plunging nearly 19% from February to April in response to President Trump’s tariff policies. However, like every good fighter, The US stock market got up and got back in the ring.
Just days later a 90 day pause in tariffs caused the US stock market to rally 9.5% in just one day- its best day in nearly 17 years! The fight continued, and two months later financial markets reached new all-time highs.
Despite tariff policy and trade disputes, in the first half of the year, US stocks finished up 6.2%, international stocks (Vanguard total international index) gained a hot 18.2%, and bonds continued to serve as the ballast gaining 3.8%.
I am shocked on how the markets have shaken out. It goes to show how quickly things can change. This goes to show that the disciplined investor who sticks to their asset allocation through thick and thin usually wins. Last quarter was certainly no different.
We are fortunate that financial markets rebounded so quickly and we must remember this is not always the case. Some market pullbacks are short lived and others are long lasting. Most of the time there is light at the end of the tunnel and it often comes when we least expect it.
The Stoic philosopher Epictetus said “There is only one way to happiness and that is to cease worrying about things which are beyond the power or our will.” The cornerstone of financial peace is having a good financial plan to clarify how much risk you can take in your portfolio emotionally and financially. Everyone of our clients have a good financial plan so no matter what the markets do, you will be okay.
If you still find yourself using worry minutes, we are just a phone call away to help you put it all in perspective. Thank you for your trust in our work.