Market Update: Strategic Shifts in an Evolving Landscape

Over the past week, markets have experienced heightened volatility amid escalating trade tensions, renewed geopolitical uncertainty, and growing concerns over the broader macroeconomic outlook. While the Dow, S&P 500, and Nasdaq have declined sharply, we’d like to share our perspective on what’s driving the decline, how we’re thinking about the road ahead, and what this means for your portfolio.

What’s Driving the Decline?

Recent market weakness has been driven by a combination of factors:

1. Policy & Liquidity Risks: Concerns around fiscal deficits, interest rates, and monetary tightening have created a more fragile environment for risk assets.
2. Trade Policy Uncertainty: President Trump’s tariff actions and ongoing disputes with key trade partners have triggered fears of slower global growth, rising inflation, and reduced corporate earnings.
3. Valuation Reset: Elevated stock valuations entering 2025 left the market vulnerable to re-pricing as macro conditions deteriorated.

Where Might We Go from Here?

While short-term market movements are unpredictable, further downside is possible if tariffs and retaliatory measures continue to escalate.

How We’re Positioned

We have been preparing for this environment for some time. Over the past several months, we’ve taken strategic steps to protect client capital and enhance portfolio resilience:

1. Since January 2025: We’ve been gradually shifting portfolios toward more conservative allocations, including short-duration fixed income, cash, precious metals, and select alternatives.
2. October–December 2024: We tactically entered select dislocated areas of the market, capturing short-term gains in what was otherwise a fragile environment.
3. Early January 2025: We rebalanced portfolios toward target allocations, anticipating late-cycle dynamics and rising volatility.

A Shift in Outlook

The developments of the past week represent more than short-term turbulence—they signal a meaningful shift in the market environment. In response, we activated our capital preservation strategy last week, and rebalancing efforts have continued through this week.

Our Current Allocation Goal

We are targeting a 60% to 80% conservative allocation across portfolios, with a focus on liquidity, capital stability, and flexibility. We will maintain this posture until we see clear catalysts that warrant a more constructive re-risking of capital.

Staying Focused

While headlines may change day to day, our responsibility is to navigate this environment with discipline and clarity. History shows that moments like these often present long-term opportunities—but timing and positioning are key.

We remain actively engaged, vigilant, and aligned with your long-term goals. If you would like to discuss your portfolio or the current environment in more detail, please don’t hesitate to reach out.