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“The four most dangerous words in investing are: ‘This time it’s different.’” – Sir John Templeton
We know recent headlines and the significant market drop may feel unsettling, and it's understandable to wonder if this time truly is different. In moments like these, Sir John Templeton's famous insight becomes particularly valuable: “The four most dangerous words in investing are: ‘This time it’s different.’”
Since President Trump's election, markets have experienced ongoing volatility due to uncertainty about potential policies, particularly tariffs. These tariff concerns have continued to influence investor sentiment and contributed to the stock market decline.
Here's what you should keep in mind:
Tariffs Explained Simply:
Tariffs are essentially taxes on imported goods. They aim to encourage domestic manufacturing and help manage the trade deficit. While well-intended, tariffs also can mean higher costs for companies importing materials or goods from abroad.
What's the Real Impact?
Some industries, like manufacturing, may face higher costs, which could impact profits. Other sectors, like healthcare and utilities, are less affected due to their largely domestic operations.
What Does This Mean for You?
Short-term volatility is normal in financial markets. The S&P 500, an index of the largest stocks in the U.S., has gained about 10.5% annually since its inception in 1957.1 This covers almost a 70-year period of wars, recessions, political upheavals, "irrational exuberance," and boom/bust cycles. Investors who maintained discipline and remained in the market over the long term have been rewarded.
Markets In Perspective
Please look at the attached “Markets in Perspective” piece from our friends at First Trust. This can help us gain perspective on market volatility and the value of staying on course to achieve success in investing.
We're here for you. If you have any questions or concerns, please contact us. Our priority is helping you remain confident in your long-term investment strategy.
Sincerely,
Vickie, Andrew, Paul and the Team of Petix & Botte Financial
Attachment: Markets in Perspective
"Markets in Perspective" was prepared by First Trust Portfolios L.P. and reflects the current opinion of the authors. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust is not affiliated with Petix & Botte Financial or LPL Financial.
Stocks are measured by the Standard & Poor's 500 (S&P 500) Composite Index, which is an unmanaged index considered to be representative of the overall U.S. stock market. Index performance is not indicative of the past performance of a particular investment. Individuals cannot invest directly in an index. The returns and principal values of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.
The S&P 500 index was introduced in March 1957, when it was expanded from 90 companies to 500 and renamed the S&P 500 Stock Composite Index.
Sources:
1. Business Insider.com, January 2, 2025, Average Stock Market Return: A Historical Perspective and Future Outlook
2. Empower Q2 2025 Market Outlook - Research Spotlight - The Tariff Pinch - Estimating the Impact on Earnings