As you are all aware, April and May brought renewed volatility to global financial markets, driven by geopolitical tensions (notably tariffs), fiscal policy developments (such as the "Big Beautiful Bill"), and shifting inflation expectations. While recent market movements have understandably been unsettling, it’s important to remember a core principle of long-term investing: staying the course during periods of turbulence is often the most prudent and effective strategy. Deviating from your financial plan during volatile times can cause lasting harm to your long-term goals and compromise your overall financial peace of mind.

The purpose of this article is to emphasize the importance of maintaining discipline as market volatility rises and falls. The past several months have clearly illustrated how markets can be disrupted by headline-driven risks.  Yet history shows that when cooler heads prevail, markets tend to stabilize and recover.

Short-Term Noise, Long-Term Discipline

In recent weeks, headlines have been dominated by dramatic announcements, including the U.S. credit rating downgrade by Moody’s, a broad-based sell-off in global bonds, and President Trump’s aggressive tariff proposals targeting both Apple and the European Union, along with existing tariff proposals that are currently on pause. These developments have led to sharp movements in both equity and bond markets, stoking concerns about economic stability, corporate profitability, and global trade dynamics.

Yet, even amid this uncertainty, U.S. equities have shown remarkable resilience. The S&P 500 posted solid gains in April and continues to trend positively in May, buoyed by strong corporate earnings, particularly in the technology and healthcare sectors. Investors who chose to exit the market during the initial April pullback due to the “liberation day” announcement (or increased their cash holding by a substantial amount) may have missed out on the rapid rebound in the markets once President Trump announced the initial pause and the later discussions with China.  This is a moment where short-term stress should be met with a deep breath and a realization that the initial shocks are usually overblown.  By focusing on the underlying fundamentals of the investments, you are more likely to remain invested and not miss out on the likely recovery. This also serves as a powerful reminder: timing the market consistently is nearly impossible, but time in the market remains a winning formula.

Inflation, Interest Rates, and Tariffs: Context Matters

April’s Consumer Price Index (CPI) and Producer Price Index (PPI) reports pointed to continued disinflation, with both metrics coming in below expectations. While there is still potential that we may see a pickup in inflation as the tariff data continues to flow through the data, we do believe that this should be somewhat transitory, but we will continue to monitor and address it in case this is not the case.  These results suggest that the Federal Reserve's interest rate policy is gaining traction, giving the central bank more flexibility to keep rates steady in the coming months/quarters. Despite rising long-term Treasury yields, driven largely by global concerns over deficits and government spending, the data supports a gradual and sustainable economic normalization, not a crisis.

The recent tariff rhetoric, while headline-grabbing, should be viewed through a broader lens. While tariffs can disrupt supply chains and increase costs in the short run, markets are often forward-looking. If history is any guide, markets tend to recover once the policy uncertainty subsides. Moreover, the U.S. economy remains dynamic and diversified, with companies able to adjust sourcing strategies, pricing models, and global partnerships over time.  Also, we must remember that President Trump prides himself on making deals.  We should expect to see him making a push to bring other countries to the table to hammer out paths forward that are mutually beneficial.

Emotional Investing Can Be Costly

During volatile periods, it can be tempting to “wait things out” or reduce exposure to risk assets. However, as stated earlier, pulling out of the market during downturns can significantly harm long-term returns. Studies show that missing just the top 10 best days in the market over a decade can reduce overall returns by more than half. Many of these best days occur within weeks of the worst ones, making it crucial to stay invested to capture the rebound.

Market corrections are a natural and healthy part of the investment cycle. They often pave the way for new opportunities, especially for long-term investors who remain focused on fundamentals, not headlines.  We encourage you to review some of the recent publications that we have provided that discuss the importance of remaining invested.

A Time-Tested Approach

We encourage you to view current volatility not as a signal to retreat, but as a reminder of the importance of adhering to the well-diversified, goal-oriented financial plan that was developed between you and your advisor. The U.S. economy continues to demonstrate strong underlying momentum, driven by innovation, productivity, and corporate strength. By adhering to the sound strategy developed with your advisor and remaining disciplined, you are better prepared to navigate uncertainty while positioning for long-term success.  It is by doing this that you can maintain your financial peace of mind and enjoy the early part of summer with your friends and family.  As always, if you have any questions, please feel free to reach out to your advisor.  We hope you have a great start to your summer!

Bottom line: The markets may be volatile, but your investment goals are long-term. Staying invested, staying diversified, and staying focused remains the best way to weather the storm—and to benefit when the skies clear.