Market Volitility Rises Amid Tariff Uncertainty
While the new administration campaigned on raising tariffs, the hard numbers revealed in last night’s press release were worse than expected. The uncertainty for businesses, markets, and consumers is exceptional. As part of our ongoing market analysis, we have maintained a cautious stance on equity exposure in recent months. However, this new information makes us even less enthusiastic about U.S. stocks and reinforces our confidence in maintaining a well-diversified portfolio that includes additional fixed income and alternative asset classes. We will continue to assess the details of the tariff developments.
As we write, the U.S. stock market has declined approximately 13% from its peak in February, officially entering correction territory. While unsettling, this type of downturn is not unusual.
As challenging as this environment may be, your portfolio was designed and is managed to withstand financial market turmoil, including volatility from potential trade conflicts. Our disciplined risk management approach is built on the following key principles:
- Portfolio Balance – Investing not only in equities but also in bonds, cash, and other “lower-correlated” asset categories that provide a predictable stream of income.
- Industry/Style-Sector Exposure – Limiting exposure to any single sector of the economy (e.g., technology) and proactively adjusting allocations when conditions in specific industries are expected to deteriorate.
- Market Analysis – Our investment committee regularly analyzes market and economic data to identify emerging risks. This ongoing assessment prompted our earlier caution and risk reduction in many portfolios. Now, our analysis indicates rising economic stress, which may warrant further adjustments.
The careful combination of these risk-control strategies has served your portfolio well in the past and will continue to do so in the period ahead.
As always, we are honored and grateful for the trust you have placed in Oarsman Capital. A core tenet of our firm is that trust must be earned every day as we oversee the investment of your assets. Please don’t hesitate to reach out if you would like to discuss your portfolio or the markets, particularly if any aspect of your personal situation has changed.
Your Oarsman Capital Team