As many of you have likely noticed, the stock market has experienced a notable drop in recent days. It’s understandable to feel concerned when headlines focus on red numbers and volatile trading sessions. We want to take a moment to talk with you about what’s going on, how we’re thinking about it, and most importantly, how we’ve already prepared your portfolio for times just like this.
What’s Causing the Current Market Drop?
The current pullback in the market, as of April 4, 2025, is being driven largely by uncertainty surrounding new tariffs and the potential impact they could have on the economy. While the actual effects of these tariffs haven’t materialized yet, markets are forward-looking and tend to react to what might happen rather than what has happened. That can lead to sharp, short-term swings in pricing as investors try to anticipate future economic trends.
But here’s the key point: these economic policy decisions—like imposing tariffs—can also be reversed just as quickly. A single announcement from the administration scaling back or eliminating these tariffs could shift market sentiment dramatically. Making long-term investment decisions based on short-term political or policy actions often leads investors astray. We’ve seen this movie before.
Staying Grounded Through Diversification
When the markets get choppy, it’s important to return to the core principles of sound financial planning—and diversification is one of the most critical. At EKS, we build portfolios to be diversified across multiple asset classes, including both stocks, bonds, and cash. This diversification isn’t just a buzzword—it’s a strategy designed to help reduce risk and weather exactly these kinds of market downturns.
We also want to remind you that your portfolio isn’t just designed for growth; it’s also structured with your income needs in mind. Specifically, the fixed income (bond) and cash portions of your portfolio are there to provide stability and cash flow during market downturns. That means if you need to draw from your portfolio, we don’t need to sell stocks at lower prices. Instead, we can rely on the more stable portion (bonds and cash) to meet your cash needs, giving the equity portion time to recover.
Institutional Traders vs. Long-Term Investors
Another important point to understand is who’s doing most of the buying and selling in today’s market. Much of the daily movement is driven by institutional traders—hedge funds, investment banks, algorithmic trading firms—whose goals and time frames are very different from yours.
These institutions may be trading based on daily, weekly, or quarterly outlooks. Their strategies often involve responding quickly to headlines, economic data releases, or technical signals. This type of trading is not about long-term financial planning—it’s about short-term positioning.
You, on the other hand, are a long-term investor. Your goals are based on timelines that typically stretch out five years or more. That’s a completely different mindset—and a completely different approach. Reacting to short-term market movements with long-term money usually leads to poor outcomes. It’s like trying to navigate a cross-country road trip by reacting to every traffic light. You’ll never get where you’re going.
We’ve Been Here Before
It’s important to remember that market drops are nothing new. Over the past 100 years, the stock market has weathered wars, recessions, political turmoil, inflation spikes, pandemics, and yes—tariff battles too. Every time, the cause was different. But the outcome? Historically, it’s always been the same. Markets rebound. Patience and discipline have always paid off.
It’s completely normal to feel uneasy during times like this. No one enjoys watching their portfolio drop in value. But history shows us that the best course of action is rarely to sell during the storm. Instead, the key is to stay invested, stay diversified, and trust the long-term plan that’s been thoughtfully designed for your unique goals.
We’re Here for You
As always, we want you to know that we’re watching the markets closely. At EKS, we’re constantly monitoring the economic landscape, the latest policy developments, and how they may impact your financial plan. If adjustments ever need to be made, we will make recommendations with care and with your long-term goals in mind.
Most importantly, we’re here to talk. If you have questions about what’s happening, concerns about your portfolio, or just want to better understand the strategy we’ve built together, we welcome the conversation. We’re always happy to walk through your specific plan and show how it’s built to handle periods like this.
Final Thoughts
Market declines can be unsettling, but they are also a normal and necessary part of the investing journey. They provide opportunities for long-term investors, help reset valuations, and often set the stage for future growth. The key is to stay grounded in a sound plan, avoid reacting to short-term noise, and maintain a long-term perspective.
We believe the current situation is no different. Yes, there is uncertainty around tariffs and their potential impact. But just as these policies can be introduced quickly, they can also be reversed. Trying to time these shifts is nearly impossible, and history shows that investors who stay the course are the ones who benefit most over time.
Thank you for your continued trust in EKS. We are honored to support you—especially in times like this.
