Market Update

Seaside Wealth Management's Market Update

The market has been volatile lately in response to the tariffs that are rolling out. A tariff is essentially a tax on goods imported to the United States and is designed to help protect U.S. businesses. There are various reasons why tariffs are being used but the main reason is to lower the U.S. trade deficit with other countries, which has been increasing since the ‘70s.

The market has pulled back since its all-time high on February 19th and we are now in correction territory which is defined as a decline of 10% of more.

What most people don’t realize is that tariffs have been around for a long time. In fact, tariffs were used during President Trump’s first term in office. We experienced volatility in 2018 but the market eventually recovered and went on to post new highs the following year.

Market volatility is never fun to endure, but it is a normal part of investing. During most years the market experiences a tremendous amount of volatility. Over the last nearly 100 years, the market has experienced a correction 64% of the time. In some cases, a correction can turn into a bear market, defined as a pull back of 20% or more. We have had 15 bear markets since World War 2, the most recent being in 2022 in response to inflation.

Will this most recent bout of volatility turn into a bear market? Nobody knows for sure. But what we do know, is that reacting in response to market volatility is not good for your financial health. When people make decisions out of emotion and in response to market volatility, they run the risk of doing the wrong thing at the wrong time.

Take a look at the data around what happens if you pull your money out of the market and mistime it.

Missing just a few good days in the market can destroy a lifetime of saving, planning and investing. And often times, the best days come on the heels of the worst days!

There is always a reason to get nervous and we remind you that reacting out of fear is not a good investing strategy. It leads to bad decision making which produces poor investment results.

We remind you that the market is very resilient and responds well to crisis over time. 

So what should an investor do? What we do at Seaside, in times like these, is take every advantage that is presented to us. We use this as an opportunity to rebalance your portfolio. Nearly every bond position in your portfolio is in positive territory presenting an opportunity to deploy those gains and find stock investments that are on sale. We also like to tax-loss harvest which will help lower your tax bill and save you money in the future. Additionally, we like to deploy cash on the sidelines to take advantage of buying opportunities that present themselves.

We are actively monitoring the situation and will be communicating with you throughout as we help to navigate this. Please feel free to contact our office if you have any questions or concerns. It’s a pleasure to partner with you on the journey.

This commentary reflects the personal opinions, viewpoints and analyses of the Seaside Wealth Management, Inc. employees providing such comments, and should not be regarded as a description of advisory services provided by Seaside Wealth Management, Inc. or performance returns of any Seaside Wealth Management, Inc. client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Seaside Wealth Management, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.