Market Commentary
The Trend is Your Friend
Overview- 2025 has been an exciting year between war, tariffs, inflation, and so on. Regardless of the volatility, the market hasn’t moved too much since last year, so we have reserved judgement until things are a bit clearer. Our expectation is that, barring any further surprises, there is potential for the market to move higher by year end; some details are below. From the ashes of a -57% decline in 2008 / 2009, the current secular current bull market was born. In the first decade after that low, we experienced four declines of around -15%: 2010, 2011, 2016, 2019. Since then, volatility has expanded both to the upside and downside, with declines of -34% in 2020 and -25% in 2022, the former ending in record time (23 trading days) and the latter lasting most of the calendar year 2022, a much longer drawn-out affair. During 2Q of this year we experienced the seventh pullback during the secular bull market. The market declined -19% in 34 days, the majority of which occurred in 10 days as fears of a tariff war erupted. One of the most important actions we take is to be defensive during difficult market conditions. One of the primary indicators we utilize to move the portfolio to a more defensive posture is when the S&P 500 index closes below its 200-day moving average (Exhibit A). This occurred during March of this year. However, much like the Covid decline in 2020, it ended almost as quickly as it [...]