Steady As She Goes: Thoughts on Recent Volatility
Sir Isaac Newton, after losing money on a speculative investment in the South Sea Company, purportedly claimed, 'I can calculate the movement of stars, but not the madness of men.' After a dizzying few weeks of headlines—from a diplomatic meltdown in the Oval Office to escalating tariff threats and retaliatory actions—it seems that the 'madness of men' remains exceedingly difficult to calculate!
As of March 12th, the S&P 500 and Nasdaq have declined -4.6% and -8.5% year-to-date, respectively. Companies that were leading the market just months ago are now dragging down returns. Apple, Nvidia, and Tesla have returned -13.3%, -13.8%, and -38.6%, respectively, year-to-date. Cryptocurrencies have also taken a hit, with iShares Bitcoin ETF falling -11.1%.
While not yet in correction or bear market territory—defined as a 10% and 20% drop, respectively—the market is clearly reacting to recent instability. Tariffs, DeepSeek AI, tighter monetary policy, and the reshaping of the U.S. economy under Trump contribute to an environment of rapid change, leaving investors scrambling to process the deluge of new information. Amid the rapid policy changes, there have been a couple of bright notes including a drop in the Consumer Price Index from 3.0% to 2.8% and a cooling economy that may lead to Fed rate cuts. Additionally, after two years of strong returns, this market could offer buying opportunities for investors holding cash, as sharp downturns of 10-20% are often followed by double-digit rallies within three months, barring a recession.
While the volatility may feel unsettling, we encourage our clients to remain steadfast and trust in the resiliency of the U.S. economy and its robust businesses. We confess alongside Sir Isaac Newton that we cannot predict how the 'madness' of world events will drive short-term market movements. However, unlike Newton, who invested in a company that sorely lacked financial durability, we focus on sound investments capable of withstanding market and economic shocks. This gives us—and our clients—a competitive edge: the ability to stay patient through volatility, allowing wealth to accumulate steadily as markets recover and grow. We have linked a helpful piece from LPL Financial below that provides further insights.
Please do not hesitate to contact the JSO team if you have any questions or would like to discuss your portfolios further.
These views are those of the author, not of the broker-dealer or its affiliates. This material contains an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. All investments involve risk, including loss of principal. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources.
The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States.
The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. You cannot invest directly in an index. Consult your financial professional before making any investment decision.
Consumer Price Index The Consumer Price Indexes (CPI) program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services (Source: U.S. Department of Labor).
