Patience Over Panic

Markets continue to be under pressure as we navigate economic uncertainty, particularly surrounding tariffs. As is often the case when selling begins, the escalation sometimes stems more from fear than from fundamental or economic rationale. In short, during declines, selling often begets more selling.

Having endured more pullbacks and bear markets than I care to count, I’ve noticed that the emotional domino effect tends to follow a familiar pattern. In my experience, prices erode to the point where even the most steadfast investors grow concerned, tempting them to make short-term emotional decisions in search of temporary relief from discomfort. However, history has shown that, eventually, the dust settles, a catalyst emerges to shift sentiment, and just as quickly as the bear market arrived, the bull market follows.

While we’ve grown accustomed to market turnarounds occurring within days rather than weeks or months, history reminds us that some rebounds take much longer. It wouldn’t surprise me if the recent market weakness reflects broader economic concerns, such as rising unemployment—an issue that, in my opinion, won’t be resolved quickly.

That said, I believe we have navigated this recent weakness well, having already taken precautionary steps. We now find ourselves in the fortunate position of having buying power during a decline rather than simply holding on and hoping for the selling to stop. However, I see no urgency to re-enter the market just yet, as the coming months remain uncertain.

In the extreme short term, markets appear to be deeply oversold. Technical indicators, such as put/call ratios and investor sentiment, have reached record levels, often signaling a significant bounce ahead. With 2020 and COVID being an exception, markets rarely trade lower day after day without some form of relief. In my view, this decline is likely to bring about a strong relief rally soon.

If this rally materializes sooner rather than later, we will closely monitor the fundamental and economic backdrop to determine our next steps—whether that means committing new capital, raising more cash, or remaining on the sidelines as we are now.

While I remain concerned about rising consumer debt levels and persistent inflation, I am also mindful of the Federal Reserve’s ability to cut interest rates when necessary. Moreover, I firmly believe that no administration wants to see its policies derail economic progress. In my opinion, at a certain point, regardless of stock market fluctuations, tough rhetoric on tariffs will likely soften for the sake of broader economic stability. Of course, fiscal and budgetary concerns remain, but that is a discussion for another day.

In summary, I am very pleased with our current positioning and see no immediate need for action. I anticipate a strong oversold bounce in the near future, and rather than chasing it, we will assess the fundamental and economic landscape before making further allocations. Until then, we wait.

Many of you have been with us for decades, and we truly appreciate the trust you place in us. Rest assured that, regardless of short-term market movements, we will continue to navigate these conditions with a steady hand and a disciplined approach—whether in a bull market or a bear.

Until next time

~ Quint

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