As you are seeing, stocks have been in sell mode in recent weeks, including a big drawdown yesterday. After hitting an all-time high on February 19th, the S&P 500 index has slid more than 8%, and almost 6% just in March, leaving it down about 5% this year. The technology-heavy NASDAQ index has fallen more sharply and now is off about 10% year-to-date.
Thayer portfolios generally are holding up well so far, benefitting from 1) a modest equity underweight, 2) meaningful exposure to non-U.S. markets, which have risen this year, and 3) some de-emphasis of technology and AI exposure on valuation concerns. Also, the bond side has provided positive returns. Clients in more concentrated two-fund U.S. equity portfolios have felt more direct impact, but this has been ameliorated by a 40% cash position.
Along with some basic investment gravity after two strong calendar years, the recent stock market declines reflect growing concern about the direction of the economy and uncertainty around policy-making in the White House, with the new administration having been in power now for about 50 days.
Markets had been nervous with tariff policy set to go into effect last week, and then continued to sell off as a series of policy changes were announced, breeding uncertainty and unease. Key industries such U.S. auto production have been unable to manage their spending and manufacturing. Corporate uncertainty is high, on a par with the COVID era. In turn, consumer confidence has fallen markedly.
On this new landscape, economic forecasts have become a bit gloomier, following a solid two and a half years and 2.3% growth in last year’s final quarter. After a general earlier view that growth would continue in 2025, we’ve seen a few negative numbers crop up. Moreover, President Trump himself wouldn’t rule out a recession when asked over the weekend. That said, recent comments from Federal Reserve chair Jay Powell have been more sanguine, citing a labor market “in balance” and an economy “in a good place”, but we will hear fresh thoughts from him when his committee meets next week.
We entered the year in a moderately defensive position, given concerns about valuation as well as general wariness about leadership transition and policy changes. We continue to feel the positioning is appropriate, but of course no one is immune. As always, we encourage taking the longer view. We continue to believe in and practice diversification and tactical management to help navigate the rougher weather, as well as more benign conditions.
We will be back as events dictate.
David S. Beckwith, Chief Investment Officer
If you’re thinking about selling your stocks, you might want to think twice
March 10, 2025
The Associated Press
Much like all the upheaval shaking the world, the huge swings rocking Wall Street may feel far…
Read more →
Market Update
As you are seeing, stocks have been in sell mode in recent weeks, including a big drawdown yesterday. After hitting an all-time high on February 19th, the S&P 500 index has slid more than 8%, and almost 6% just in March, leaving it down about 5% this year. The technology-heavy NASDAQ index has fallen more sharply and now is off about 10% year-to-date.
Thayer portfolios generally are holding up well so far, benefitting from 1) a modest equity underweight, 2) meaningful exposure to non-U.S. markets, which have risen this year, and 3) some de-emphasis of technology and AI exposure on valuation concerns. Also, the bond side has provided positive returns. Clients in more concentrated two-fund U.S. equity portfolios have felt more direct impact, but this has been ameliorated by a 40% cash position.
Along with some basic investment gravity after two strong calendar years, the recent stock market declines reflect growing concern about the direction of the economy and uncertainty around policy-making in the White House, with the new administration having been in power now for about 50 days.
Markets had been nervous with tariff policy set to go into effect last week, and then continued to sell off as a series of policy changes were announced, breeding uncertainty and unease. Key industries such U.S. auto production have been unable to manage their spending and manufacturing. Corporate uncertainty is high, on a par with the COVID era. In turn, consumer confidence has fallen markedly.
On this new landscape, economic forecasts have become a bit gloomier, following a solid two and a half years and 2.3% growth in last year’s final quarter. After a general earlier view that growth would continue in 2025, we’ve seen a few negative numbers crop up. Moreover, President Trump himself wouldn’t rule out a recession when asked over the weekend. That said, recent comments from Federal Reserve chair Jay Powell have been more sanguine, citing a labor market “in balance” and an economy “in a good place”, but we will hear fresh thoughts from him when his committee meets next week.
We entered the year in a moderately defensive position, given concerns about valuation as well as general wariness about leadership transition and policy changes. We continue to feel the positioning is appropriate, but of course no one is immune. As always, we encourage taking the longer view. We continue to believe in and practice diversification and tactical management to help navigate the rougher weather, as well as more benign conditions.
We will be back as events dictate.
David S. Beckwith, Chief Investment Officer
If you’re thinking about selling your stocks, you might want to think twice
March 10, 2025
The Associated Press
Much like all the upheaval shaking the world, the huge swings rocking Wall Street may feel far…
Read more →