If you’ve worked up the guts to glance at your portfolio lately, you might be pleasantly surprised. It might even look like very little has happened this year. Of course, it has felt like a malfunctioning roller-coaster ride. In fact, 2025 resembles Lemony Snicket’s “A Series of Unfortunate Events.” It’s been one thing after another.
It all started when the new administration took office. The onslaught of executive orders, slash-and-burn DOGE tactics and abrupt policy reversals immediately shook investors and retirees, alike. To be honest, I’ve lost count of how many people have expressed worry over the future of Social Security. That part is particularly unfortunate.
Then came the tariffs. As we all know by now, in early April President Trump unveiled a tariff policy that was seemingly devised by a procrastinating, high-school student relying on ChatGPT. To put it nicely, it made no sense. In response, the stock market plunged nearly 15% in a matter of days. Succumbing to Wall Street’s pressure, President Trump tweeted out a 90-day “pause.” The market then spiked 10% in the span of just an hour.
Since cooler heads appear to have prevailed, the stock market has clawed its way to within spitting distance of its all-time high set in mid-February. But, we aren’t out of the woods. The new tariffs and their inflationary and economic pressure remain a focus. The Fed’s path is very murky, to put it mildly. In classic economist-speak, on one hand the economy is slowing. But, on the other hand, tariffs are inflationary. I’m pretty sure derogatory jabs by President Trump are not making things any easier for the Fed.
The promised avalanche of big trade deals to come has yet to materialize. The fact that the April tariffs might soon be ruled as illegal could explain the slow progress. Why negotiate with a policy that might vanish on its own? Instead, we’ve only seen a few vague announcements of “frameworks.” Nevertheless, the markets seem to believe level-headed adults have taken things over. It’s not hard to imagine this as wishful thinking.
Adding to the mix of uncertainty, extending the 2018 tax cuts is now in jeopardy. If the massive tax and spending bill fails under its own weight, taxes could rise for almost every household. Some insist on sweeping spending cuts. Others refuse to budge on more tax breaks. It’s a game of legislative whack-a-mole. We shall see.
If you’ve found yourself mirroring the wild market moves with similar emotional swings, this recent recovery might offer a rare shot at a review and reset of your portfolio’s risk. This might mean raising some cash and trimming your stock market exposure.
This is not a prediction of doom-and-gloom ahead. As I’ve learned over the years, everything should be done with a deep sense of humility. After all, nobody can predict markets with much consistency. All things in moderation is a sound guiding principle, especially in an environment seemingly devoid of it.
