Bull & Baird: When Uncertainty Reigns
Spring is one of my favorite seasons of the year. Winter is ending, flowers are starting to bloom, and each day brings more and more sunshine. What’s not to love about daffodils, shedding our puffy jackets, and sunsets past 6pm?
However, Spring also brings horrendous storms. Massive bouts of rain and lightning are common as the atmosphere warms from its winter chill.
My family flew home from spring break earlier this week into the kind of storm that grounds airplanes. From Alabama to Wisconsin all you could see was red on the radar. Luckily, we landed before the worst hit.
As we were driving home the rain and wind were so bad we had to stop at a gas station to let it pass. The storm wasn’t aimed at us (even though it felt like it). Everyone in the region was being pummeled by the elements – no one was immune.
Sitting there I was reminded that there are moments in life that are completely out of my control, where all the wishing in the world won’t help end the event. When uncertainty about what might happen is so high that you have to sit back and let it unfold. Only after the event passes do you assess what to do next.
Kind of like the stock market in Spring of 2025.
For better or worse the new US administration wants to rebalance global trade via the use of tariffs. Whether it will work or not is up to history to decide, but right now it’s causing a storm in the stock market and there’s really not much anyone can do about it.
Like the wind battering my family, stock portfolios are being buffeted by surprise after surprise (which we know the stock market hates) and, unfortunately, no one has the answer to how this all ends. Its just too chaotic in the moment.
My dear friend Morgan Housel is fond of saying “good investing is about how you behave, not what you know. Investing rewards those who can sit still when everyone else panics”.
How could knowledge help you in this moment when even the stock market is struggling to understand what’s happening day to day?
What was the key to getting through massive uncertainty in the stock market during 2020? Behavior, not intelligence. What you did in March of 2020 determined all your investing success for the next 5 years.
Would it have made sense for me to take some dramatic action during the big storm this week? Should I have stepped out of my car and raged at the sky? No. Should I have pushed on and put my family in danger even though driving conditions were hazardous? Also no.
When there is red on the radar, or red on your stock screen, it’s time to think through the best decisions you can make and not let fear take over.
When uncertainty reigns, your reaction to it determines your success or failure. Hunkering down and waiting for a storm to pass is sometimes the correct course of action.
Let Wall Street sift through this paroxysm of uncertainty, stay calm, and when the winds die down a little, you and your Financial Advisor can assess where you are and what to do next.
The information reflected on this is a Baird opinion and subject to change. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor before taking action.
