The Weekly Update 4/04/2025™ 

Written by Brittany Jarocki CFP, (Jim's business partner, daughter and the succession plan Jim hopes he never needs).

In only a few weeks, the broader market has gone from record highs to correction territory, marked by a drawdown of at least 10% from a new high. Tariff uncertainty has captured most of the blame for the selling pressure and is exacerbating economic growth concerns. The key point here is that it is not the tariffs themselves creating the volatility, but rather the uncertainty and unknows around the tariffs. Clarity will be the key to moving forward.

The sharp drop in equity markets has been painful, especially given that the selling pressure started at a fresh record high on February 19. However, the downside rate of change and current drawdown is nothing out of the ordinary. In fact, I would go as far as to deem it “healthy”.

Since 1950, 92% of trading days are accompanied by some degree of a drawdown on the S&P 500 (roughly 8% of days have been record highs). A drawdown inside of 5% is the most common, occurring in around 40% of all trading days.

Drawdowns of 5% to 15% occur in just over 25% of all trading days, making the current 9.3% maximum drawdown nothing unusual. Drawdowns that exceed 15% occur in 26% of all trading days, with most of those days occurring in recession, which is not our prediction. (Source: LPL Research 3/13/25)

There is no question that computers are running the show and don’t take economic indicators, news headlines, or facts into account. The algorithms simply have instructions to execute buys and sells at set prices, with no brain to tell it if that makes sense or not. So, just like we experienced sharp downward movement, it is likely that the market is now in the process of finding its footing on the bottom. Then the computers will rev back up and this pullback will likely look like a minor speedbump when we look at it in our review mirror a year from now.

The ”shock absorbers” that we have held in client accounts have done their job and not participated in the volatility. However, if the recent pullback made you lose sleep at night, it may be time to review your portfolio.

I’m interested in your thoughts, comments and observations. Feel welcome to call, email, or stop by the office and say Hi.

Respectfully,

James O. Lunney, CFP®

CERTIFIED FINANCIAL PLANNER™ Professional 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.  Investing involves risk. Loss, including loss of principal, may occur. No strategy assures success or protects against loss. All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly

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