Better Financial Health in 15 Minutes (or less!)

Waves of Uncertainty: Finding Calm in Financial Turbulence

• Stacey Hyde

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Market turbulence can shake even the most steadfast investors, and the recent plunge triggered by Trump's tariff announcements has certainly tested our collective financial resolve. What began as market jitters has escalated into a significant correction, erasing twelve months of gains in mere days. The unexpected breadth of these tariffs—targeting not just trade adversaries but allies like Canada, Japan, and Mexico—has created widespread concern about their impact on global supply chains and consumer prices.

When markets plummet 10% in two days, our natural human tendency is to project that downward trend indefinitely into the future. Yet this psychological quirk rarely serves us well in financial decision-making. History consistently demonstrates that market overreactions create opportunities for disciplined investors. Whether we look back to Black Monday in 1987, the financial crisis of 2008-2009, or the pandemic-induced crash of 2020, the pattern remains remarkably consistent—those who maintained their positions and continued investing during downturns were rewarded within a year's time.

The real-world implications of these tariffs extend far beyond abstract market indices. As The Wall Street Journal recently highlighted, the production cost of an iPhone could jump from $580 to nearly $900 under the proposed tariff structure. This stark example illustrates why investors are rightfully concerned. However, proper portfolio planning anticipates these market disruptions. For those taking regular distributions, funds were likely already secured in February, safely earning interest above 4% in money market accounts. Fixed income investments have actually appreciated as interest rates declined. And for taxable accounts, this volatility creates valuable tax-loss harvesting opportunities. Remember that worry has never improved a single investment outcome—your financial journey continues beyond this moment of uncertainty, just as ocean tides reliably return after receding from shore. What steps will you take to maintain perspective during this challenging market environment?

Envision Financial Planning. 5100 Poplar Avenue, Suite 2428, Memphis, TN 38137. (901) 422-7526. This communication is strictly intended for individuals residing in the United States. Advisory Services offered through Envision Financial Planning, a Registered Investment Adviser.

Speaker 1:

Hello everyone. As most of y'all already know, I'm Stacey Hyden, I'm the president of Envision Financial Planning and, while I do have a podcast, which I would love it if you'd listen to it it's called Better Financial Health in 15 Minutes or Less. Today I wanted this is directed towards the clients of Envision, towards the clients of Envision. The turmoil in the market that started with the announcement of the Trump tariffs and that really accelerated late last week today is Monday, april 7th, as we're recording. This really was sort of a worst case scenario. I think there was some thought that there would be some tariffs, mostly against the countries that charge tariffs to the US, but in fact, the tariffs were more based on the trade imbalances between countries and, as you can imagine, most trade imbalances come about because that particular country either has the right resources meaning natural resources that we don't have here in the US or because their cost of production is lower. Think Vietnam is a very low cost producer of a lot of the clothing and things like that that we consume. So these tariffs and they also hit a lot of our allies Japan, canada, mexico and I think that that has really unsettled markets. I know, personally it's rattled me, but when we think about scary markets, the first thing we need to do is to take a step back, and what we really need is a hug, because it's not any fun to open your app or look at an investment statement and see that your account lost 10% in two days. That is upsetting to anyone, no matter what your account balance is, and especially if you're nearing a milestone, such as getting ready to retire or thinking about needing to pull a big withdrawal out. It is unsettling, to say the least, but what we have to be careful of because it's human nature. We see trends and we just assume that they're going to keep on going in that direction.

Speaker 1:

You know when markets were going up and markets have really gone up pretty much unchecked since the markets bottomed out in the financial crisis back in March of 2009. We had a brief pullback in 2020 due to COVID, but that snapped back really really quick. And then we had a bad year in 2022, which was also unsettling because it hit bonds which were supposed to be safe, and it also hit stocks pretty much all at the same time, so that was upsetting as well. But we've had good years in 2023 and 2024. And I think part of what's gone on is a lot of people's base case was we looked back to how the economy did under the first Trump administration and you know you've got to be careful when you assume. We assumed it would be something similar and we'd have good markets, very business friendly, but with the tariffs it has really upended everything and it is scary and it has upset the markets and in the short term markets react and I would say that oftentimes markets overreact. So the markets have pulled back fairly substantially in a very short period of time. We're almost to the market close today and it's looking like they're going to continue to pull back, but not at the magnitude they have been over the last couple of days. But we have given back all the gains in the stock market since April of 2024. So we've essentially all the gains we've had over the last 12 months. They're gone. But are they gone forever? I would argue that they're not, that valuations are now make much more sense, both domestically and on the international scale, and we've we remain cautiously optimistic that this is not a forever situation.

Speaker 1:

I'm not even going to venture to guess what goes on in the Trump administration's collective mind as far as how they're going to implement this, but there are a lot of countries that have said they're not going to do retaliatory tariffs. I think it was announced that 50 different countries had reached out to the Trump administration over the weekend to negotiate. So I think that there's going to be some sort of resolution to this and I'm hopeful that it will work out. Because if these tariffs are implemented, it is going to raise the cost of living dramatically for every American, because so much of what we buy today, even if we're buying a quote-unquote American-made product, so much of that has components that are not made here. Because that's really been the beauty of our supply chain is we can move production to a country that can do it maybe cheaper and more efficiently than we can, but we can use the American ingenuity to create a better product the iPhone.

Speaker 1:

The Wall Street Journal ran an article over the weekend about just how much these tariffs would impact the cost of an iPhone. It's almost $580, I think was the amount that the Wall Street Journal had said for the components. With the tariffs it would be almost $900. Well, a company like Apple doesn't get to be Apple by making a 20% profit margin. They get to be Apple by making a 50% profit margin. So I think that we are going to see some changes there, and I've said a lot and talked about a lot to say that history shows us time and time again that after big negative shocks so go back to 1987, the flash crash that happened there, 2008, and into early 09, 2020, 2022, when you get a year out from those events markets have recovered and in hindsight, those times of that pullback has been a good time to be an investor.

Speaker 1:

So if you're still adding to your portfolio, keep doing it. It's a great time to do it. If you're nervous because you're getting ready to retire and you're looking at that, know that you still have a 25-year time horizon. If there's something that you need money for in the next six months year, it probably makes sense to talk with your advisor about how to raise those funds so that they're available. Your fixed income with interest rates moving down, your fixed income is actually up in value, so there's a way to raise some funds there that's not going to impact your stocks. And also, if you are currently receiving distributions due to, you know you're just taking monthly distributions or you're subject to a required minimum distribution this year know that we raised those funds back in early February, before all this market mayhem. So that money is sitting in a money market account earning over 4%. So taking that funds to support your life, your regularly scheduled distributions, is not going to harm your portfolio.

Speaker 1:

If you don't need the money and you're like, well, let. I think it's a buying opportunity. We'd love to talk to you about maybe redeploying some of that. The other side of it is that if you wind up still taking it because you're prepared this year and we've already raised the funds, so we send it to you. And if, for some crazy reason, the markets are not recovered by early next year crazy reason the markets are not recovered by early next year well then, that buys you time. Those extra cash reserves buy you time to get through these ugly times.

Speaker 1:

But just remember we as humans, the way we project, is we assume what has happened in the short term and even maybe over a couple years. We expect those trends to continue and whether that's markets going up or markets going down, both scenarios are likely to change. So right now, markets are going down and people are panicking because they expect them to continue to go down. In reality, they're going to come back up. The same thing was true when markets were going up and we were cautioning you that hey and you were saying that we were so smart we were also saying that no, markets are going to come back down at some point, because that's what markets do. I saw a video that showed the ocean and it was a beautiful, calm day and it said this feels great and normal. It's not normal. Waves and the tides go in and out twice a day. So you have to know that these cycles are going to happen and that's normal. We're prepared. We understand that it feels terrible.

Speaker 1:

My best advice is to separate yourself from the noise of these scary markets. Go spend time with people you love and, well, get outside. The sun's actually out today, after you know thought we lived in Seattle yesterday and missed it all day in the monsoon rains we've had. So try to disconnect, because guess what? Worry has never improved anything.

Speaker 1:

If you look at the list of things improved by worry, there's nothing on the list. All it does is raise your blood pressure, cause you to feel poorly. So try I know this is hard try not to worry about it. Let us worry about it, because that's what we do and these opportunities in taxable accounts is going to give us some ability to tax loss harvest, which is going to save you on your taxes later. If we were trying to reduce exposure to a sector or a stock that we couldn't, because the capital gains would be too high. They're lower now, so we'll be doing some of that, so there are advantages to this. But let us assume that worry for you. You go out, live your life, be with the people who give you joy and don't spend any more time worrying. Thanks for tuning in and if you have any issues or we can answer anything, please give us a call. Thanks so much and have a wonderful day.