Insights & Resources

Is a Larger Market Decline Normal?

Yes, market declines within a cycle are normal. Everyone, including the President, makes mistakes, and sometimes unforeseen events disrupt the status quo. Despite the challenges the world faces, it always recovers stronger. In our career, we have witnessed worse situations, such as the bursting of the tech bubble in 2000, the global financial crisis in 2008, Brexit in 2016, the COVID-19 pandemic in 2020, and the U.S. regional banking crisis in 2023. Each of these events eventually created opportunities for significant returns.

What’s Next?

Hopefully President Trump has learned that the world doesn’t revolve around him. The U.S. operates within a democratic system, where the public continually evaluates the administration’s actions and votes accordingly. The stock market functions as a “voting machine,” and both Congress and the House of Representatives provide checks and balances. We expect Trump to adopt a more balanced approach to trade negotiations over the next 90 days. Some tariffs will likely still be implemented, and U.S. consumers will bear the costs. However, the damage to relationships (and trust) with allies from this “drama” has been done. If Trump remains President, the anti-American sentiment among consumers may persist. This could negatively affect American brands and their sales, and ironically, widen the trade deficit. We anticipate that investors will price in lower growth for U.S. companies and higher growth for others. This is a better scenario than a global recession driven by supply chain disruption and high tariffs.

Disclaimers

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