Navigating Current Market Volatility
Posted on March 14, 2025
Over the past few weeks, U.S. equity markets have entered “correction” territory, retreating by more than 10% from the all-time high marked in February. A correction hasn’t occurred in the U.S. market since October 2023, leading investors to believe that this normal correction is rare (it isn’t).
Short-term negative swings in sentiment have caused a flight into cash, bonds and international equities. What’s been driving this shift? In a word, uncertainty. A stock price can be derived by the company’s expected cash flows and some estimate of the probability attached to those cash flows—in essence, a weighted average of profitability under different states of the world. So uncertainty in stocks, and in the stock market, is not unusual, it is the basic condition of investing.
But the unprecedented pace, scope and scale of the administration’s executive actions, and reversals of these actions, have created currents, and cross-currents, that are overwhelming even the most seasoned forecasters and investors. The mantra of “move fast and break things” is taking hold in an administration populated with and influenced by Silicon Valley innovators and disruptors. But this approach is not compatible, at least in the short term, with markets that thrive on quite the opposite, stability and predictability.
As we construct your portfolios, they are diversified with the objective of realizing your long-term investment goals, which is often achieved by some assets performing when others are not, or the low probability event happens. To illustrate: Mega-Cap Tech accounted for about 60% of the market’s returns in 2023 and 2024. In 2025 the high-flying sector is down 15% while the previously beleaguered Health Care sector is the year’s top-performer, up 5%. Or recall that in 2022, the portfolio ballast was Energy, up by almost 60%.
This brings us to our final point, valuation and the importance of investing discipline. Entering this year, stocks were expensive, in the highest decile of historical valuations, a factor that has contributed to the abrupt moves down. Then, as now, our Portfolio Managers at the Trust Company are attuned to disciplined, fundamental value, in both our selection and rebalancing decisions – i.e. our recent emphasis on bonds.
Of course, if the facts change, disciplined investing demands changing one’s mind, or one’s holdings. We don’t believe this is that time, but we remain nimble and vigilant to opportunities, and risks, should they arise along with the rising uncertainty.
We invite you to call or e-mail your Portfolio Manager with any questions or concerns. As always, we appreciate your continued confidence.
Kristian R. Jhamb, MBA, CFA
Chief Investment Officer
LEGAL, INVESTMENT AND TAX NOTICE: This information is not intended to be and should not be treated as legal advice, investment advice or tax advice. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal or tax advice from their own counsel.
Not FDIC Insured | No Guarantee | May Lose Value
The Sanibel Captiva Trust Company is an independent trust company with more than $5 billion in assets under management that provides Family Office and Wealth Management Services, including investment management, trust administration and financial counsel to high-net-worth individuals, families, businesses, foundations and endowments. Founded in 2001 as a state-chartered independent trust company, the firm is focused on wealth management services that are absolute-return oriented and performance driven. The Naples Trust Company and The Tampa Bay Trust Company are divisions of The Sanibel Captiva Trust Company. Offices in Sanibel-Captiva, Fort Myers, Naples, Marco Island, Tampa, Belleair Bluffs and Tarpon Springs. www.sancaptrustco.com
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