Last year (2025), our Stock Market suffered a dramatic pullback in April, then reversed quickly, and climbed up until year-end as if all had been forgotten. We appear to be somewhat ahead of that schedule in 2026, as world events have caused investors to go on a selling spree in March.
Israel and the United States decided that Iran had reached the end of its leash. Years of lying, deception, secrets, and threats pushed our powers that be over the edge. We are currently living through the process of punishing Iranian bad behavior by destroying their capabilities. We now know that Iran had tools of destruction beyond what they had heretofore acknowledged.
Two kinds of people (and their money) are in the stock market at any given time; investors and speculators. Speculators are frequent traders, attempting to “beat the market” with their insight and risk tolerance. True investors are people with their resources in the market for a minimum of 5 years. These people must live through volatility caused by the other group. Nothing we can do or say will change that relationship.
Long-term investors experience anxiety in tumultuous times. Imagine what speculators are going through as world events fly at them with little or no notice given. To me, the volatility often seems like a heart attack on a plate.
As financial advisors, our hardest days come when volatility jumps like a scared rabbit. Yet we know from training and experience that attempting to outsmart the market is a waste of time and money. And, most likely, it will take years off your life.
One old piece of market wisdom states that investors will feel the pain of a loss twice as much as they will feel the pleasure of a gain. Failing to contain those emotions is a costly mistake, a lesson learned primarily through experience. Good investor behavior is enhanced in many cases by following advice from a qualified and experienced financial advisor.
Words are well and good, but illustrations can be useful as well. In the past 12 months, the point range for the Dow-Jones Industrial Average (DJIA) ranged from 36,612 to 50,513, a spread of about 38%. How can any investor be expected to manage that variability through frequent trading?
Despite the range of ups and downs, calendar year 2025 produced a return on the DJIA of about 13%, and the S&P500 returned over 20%. These gains were earned by avoiding panic selling during down days and weeks.
Our markets have undergone frequent and harsh bad times for decades, so consider this. On Ronald Reagan’s inauguration date (January 20, 1981), the DJIA closed at 950, and recently the same index closed over 50,000. Despite many major setbacks, time in the market is still your best friend.
Watching the stock market erase recent portfolio gains is deeply frustrating, both for investors and advisors. When pullbacks occur, which they do frequently, investors become understandably concerned. When declines continue into the territory of Market Corrections (10% lower than recent highs), and occasionally into Bear Market Territory (20% retreat from recent highs), investors’ emotions can outweigh their logic and common sense.
However annoying and scary bad times become, riding out the storm is the safest process to follow. Unless, of course, your funds aren’t long-term investments with a time horizon of at least five years. Money exposed to extreme market volatility needs at least that amount of time to ameliorate risk.
Investors with dollars intended for near-term expenses or purchases need to find alternative, less volatile investment vehicles. Money Market Mutual Funds, ultra-short-term bond funds, Certificates of Deposit (CDs), and other lower-risk vehicles can protect principal while providing at least a modest return. Even yields below the rate of inflation are preferable to incurring short-term loss of needed principal through stock market volatility.
Human behavior is reasonably predictable, at least when large populations are being studied. During bad stock market years, there are observable trends. In prolonged downturns, selling activity accelerates among individual investors. As frustration grows, investors inch ever closer to making bad decisions. The final (and predictable) phase of a long, harsh down market is called Capitulation, and is observable when panic selling reaches its zenith. Many people simply take their ball and go home.
Predictably, shortly after Capitulation, institutional and other high-volume buyers emerge. Market recovery begins and quickly drives up prices, leaving shell-shocked investors behind. Watching reduced (and/or destroyed) account balances suspended in time, many investors will be afraid to re-enter the market until the recovery is mature. Assets sold during Capitulation are no longer recoverable at their selling prices, and the financial futures of many individuals and families suffer long-term impairment.
History and logic provide clear guidelines for long-term investing success. Unfortunately, human emotions run the gamut in stressful market conditions. In our financial advising business, we have been faced with pullbacks, corrections, and Bear Markets. Our job is to control panic activity (if possible).
Clients of qualified advisors tend to avoid Capitulation, though a degree of frustration is unavoidable. We can help avoid Capitulation disaster.
For several recent weeks, the stock market has been rather docile, with few outsized gains or losses. That pattern was suddenly broken in response to military action occurring far from home. While Iranians were asleep at the wheel, and Israel was on high alert, on a recent Saturday morning, we (jointly with Israel) decimated layers of Iranian “leadership.”
Financial markets detest uncertainty, and nothing projects uncertainty better than huge black clouds billowing upward where occupied buildings stood scant minutes before. Black smoke columns became especially evident on the otherwise cloudless horizon when recent attacks in Iran took place. The carefully timed (I believe) Saturday attack minimized reaction on our Stock Exchanges. Fortunately, traders did not “freak out,” and the first two trading sessions revealed very little panic selling. In fact, Wednesday turned in a solid green market performance and appeared to set the table for a minimal weekly decline. Thursday and Friday did produce a mild sell-off, and major market indices were down modestly for the week.
Where we go from here is anybody’s guess, and I expect more volatility. For frequent traders, there is money to be made during volatile times, but those frequent traders have to be correct in stock picking and timing.
For long-term investors, history tells us that patience is a virtue. There is more to riding out volatile times than merely “buy and hold.” We leave the speculators to trade their individual stock choices in a rough market. Our game plan is (always) to diversify, diversify, diversify. Rather than making bets on individual stocks, we prefer holding Exchange-Traded Funds (ETFs), mutual funds, Sector Funds, and index shares.
Thoroughly diversified portfolios are certain to include market losers in tumultuous times, but in the mix of shares will be winners as well. We want to own the winners, without having to determine (guess) which issues will become new Wall Street darlings. We diversify holdings to avoid having to guess.
Some investors look at a diversified portfolio as “going nowhere.” Some parts up, others down, and overall, results can often be relatively boring. We know that minimizing losses during volatile periods in the market makes the inevitable recovery period more profitable. Diversifying our portfolios provides a measure of stability during down and/or uncertain times.
Volatility is likely to remain high until a true settlement is reached in the Middle East. Since that day is unpredictable (at best), we’ll handle the ups and downs by exercising the fundamental principle of diversifying assets. This, too, will pass, preferably sooner rather than later. Good times will return, and we’ll be ready for the inevitable rising tide in our markets.
Thinking about hiring a financial advisor, but concerned about the cost? You are not alone. I find it perfectly rational to consider price of any service provider. Nothing wrong with demanding value for our hard-earned dollars, and especially so in this expensive post-inflationary environment.
We all perform cost/benefit studies multiple times monthly. Spending options, especially for non-essentials, must be carefully considered, as our resources are limited. We all desire the best value that fits our needs and wants, but that is not always easy to discern.
Services are generally more difficult to evaluate than products. Purchasing a product generally means what you see is what you get. Not so much for services, where results can’t be determined until after the money is pledged and the service is performed.
Contracting for financial services can seem like a leap of faith. Investors face a slew of possibilities for their discretionary dollars, whether for products or services. Products are largely insurance policies, including annuities and life insurance. Services include planning, portfolio creation and management, tax form preparation (use only qualified professionals), etc. Investors are only able to evaluate their purchases once results become evident.
Choosing a financial advisor from the murky sea of providers can be overwhelming. Finding an advisor who is a good match for your needs can often be accomplished with the assistance of various free online resources. Among them are SmartAsset.com, letsmakeaplan.org, and NAPFA.org. These websites assist investors in locating a fee-only, fiduciary financial planning professional. We suggest finding a qualified advisor who operates as a Registered Investment Advisor (RIA), such as Strivus Wealth Partners.
When choosing an advisor, the gold standard among financial advisors is the Certified Financial Planner® (CFP®) designation. Controlled by the CFP Board®, which sponsors the letsmakeaplan.org website, members’ certifications assure investors that the advisor will place their clients’ interests ahead of his or her own (required of every true fiduciary).
Similarly, NAPFA (National Association of Personal Financial Advisors) assures that members remain unbiased, so they do not sell commissioned products. SmartAsset is a private company, founded to assist investors searching for a qualified professional advisor. Their website includes a free calculator for an individual’s probable success after choosing a qualified advisor.
Recent long-term studies have determined that using a qualified advisor results in 2% to 3% higher annual investment returns (after fees). Talk to us about the actual value of our services.
Last week, we covered new and evolving trends in financial markets, including changes investors should embrace when market preferences shift. As financial advisors, we equally discourage excessive trading and static “buy and hold” portfolio neglect. Both carry “opportunity costs” and may result in leaving money on the table.
However, staying true to a predetermined portfolio design does not mean it has to remain stagnant. Planning and performing substitutions among and between asset classes according to developing investor preferences, over a long investment horizon, can bolster the creation of wealth.
Fortunately for everyone (including us), many investors rely on financial advisors to monitor trends and provide information. Our main mouthpiece is the Van Wie Financial Hour radio program, which provides us a weekly platform to share what we are witnessing in markets.
Live radio also affords the public an opportunity to comment and question in real time, using the telephone lines that are provided at no cost to listeners. Since the beginnings of the Van Wie Financial Hour in 2015, our policy has been to prioritize callers ahead of our own discussions. We also provide answers to questions submitted via email or text to Strivus Wealth Partners, the owner and sponsor of the show.
For many months, shifting preferences have been especially evident in the Technology Sector. While there is no one date where Artificial Intelligence (AI) became available to the public, the major event that changed market preferences was the launch of ChatGPT in 2022. Unsurprisingly, AI’s accessibility was met with guarded, but significant, optimism. With increased usage, demand for semiconductors (“chips”) exploded, driving growth among big chip manufacturers, including Nvidia (NVDA) and Taiwan Semiconductor (TSM). Their stock prices soared. Until they didn’t.
NVDA’s stock fell sharply in a short time, and that volatility upset many investors. Far too many stockholders had bought into the steep rise, and some bailed out when the sudden decline became a pattern. These people were chasing returns. Many lost significant value by purchasing a hot stock, followed by making panic sells well into the decline. Buy high, sell low = bad idea.
An offshoot of the AI craze has been rising popularity for the Utilities Sector, as demand for electricity has created opportunities. Increasing portfolio allocations to participate in this growth industry has been rewarding.
Several studies (some still ongoing) are revealing that long-term investment results increase with a competent advisor, adding about 2% to 3% average annual returns. Diligence is often its own reward, and we can help.
Market Sector Rotation is happening now. Every so often, investor preferences undergo a seismic shift. What’s hot tomorrow can be a far cry from what was hot yesterday. We’re not talking about selling “Company A” stock to buy “Company B” stock. As investment managers, we seldom get involved with individual stock issues. The market is just too fickle to predict with any confidence the coming success of any individual company stock.
The huge (worldwide) stock markets are divided into numerous sectors. At any moment, some sectors are coveted by investors, and lively buying causes increasing stock prices. At the same time, out-of-favor sectors experience heavy selling, and stock prices trend lower. These preferences are not fixed, but change over time, causing Sector Rotation to occur.
For an example of shifting preferences and sector rotation, Technology is one of the best and most dramatic examples. Investors have experienced several decades of love/hate relationships with Technology. In the 1990s, the newly available Internet created demand for Technology stocks. The NASDAQ Composite Index (where many Tech Companies’ stocks are listed) rose from the low 400 range to 5,048 in March of 2000.
When the “Dot-Com Bubble” burst in March of 2000, rotation out of Technology began. By September of 2002, the NASDAQ Index fell to under 1,150. An unbelievable 15 years later (2017), the NASDAQ Index reached a new high closing value, and the popularity of Technology soared. For a while, anyway.
Bonds exhibit another classic example. Following a solid performance in 2020 (+7.5% Aggregate Bond Index change), performance for the next 2 years was negative, -1.5% and -13.0%, respectively. Many investors and advisors dramatically reduced their portfolios’ bond component, rotating into other, more popular, sectors of the market, including Money Market Funds.
In recent years, Money Market mutual funds have become popular due to rising interest rates. Low risk with relatively high returns can’t last forever, and sure enough, rates have begun to fall. Money Market investors are rotating out, again finding favor in the Bond Sector.
Today’s portfolios are experiencing Sector Rotation, as Technology, Money Markets, and other sectors are losing favor, while Industrials, Materials, and International Stocks are among those gathering interest. Multitudes of buyers are causing rising stock prices in these and other preferred sectors.
Watching and understanding national trends enables investors to implement Sector Rotation while maintaining overall portfolio balance and diversification. We can help. Each and every Saturday, we relate the latest news in sector preference shifts during the Van Wie Financial Hour on WBOB radio.
April 15th is approaching quickly, and 2025 income tax reporting documents are being retrieved from mailboxes and websites everywhere. Every taxpayer is responsible for amassing all pertinent documents required to prepare annual Form 1040 (Individual Income Tax Return) on or before that date (or the automatic extension to October 15, available to individuals merely for the asking). Any tax underpayment is absolutely due by April 15.
Whether a taxpayer is using a professional tax preparer or using one of the many D.I.Y. software applications, completeness and accuracy are critical. Understanding what information is needed, and knowing when to expect delivery of necessary forms is critical to avoiding making a premature filing. Filing without complete data can result in a necessary refiling, or even worse, an audit. Rushing to file in order to get a refund is not wise, and may result in unexpected paperwork, fines, and/or interest charges.
Forms W-2 (for employees with paychecks and tax withholding) and 1099 (for self-employed people, contractors, and “gig workers”) should have already been delivered, as the due date was February 2 this year. Corrections requiring new paperwork are rare, but can happen. Delaying a tax filing for that possibility is unimportant, unless the taxpayer is aware of an error on the original form.
Investors will need to await annual statements for their (non-retirement) taxable accounts. Interest and dividends received, as well as short-term and long-term capital gains, will be itemized on an annual Composite 1099 and Year-End Summary. Late February is typical for receipt of these informational forms, though they may be amended later. Rushing to file may wind up requiring an amended filing.
Individuals with IRAs (Individual Retirement Accounts) should receive a Form 5498 if any funds were placed into the IRA. This includes contributions, Rollovers, and “Trustee-to-Trustee Transfers.” The 5498 will arrive in May, and should be kept and preserved, but not filed with the 1040. IRS receives copies of all your required paperwork.
Fewer taxpayers are itemizing tax deductions since the passage of the Tax Cuts and Jobs Act of 2017 (TCJA). That does not provide taxpayers with an excuse to jump the gun by filing before all paperwork is in place. Know what to expect and confirm each document’s veracity before filing.
Most people file electronically, but if you are mailing it in, don’t wait until April 15 and assume the U.S. Postal Service will date-stamp it on time. Add at least one “safety day,” and you will avoid a possible late fee.
Better safe than sorry when dealing with the IRS (and the USPS).
Having introduced the subject of stock market indices (or “indexes”) last week, we are sharing more indices to increase understanding of various markets. We are not talking about “hot stocks.” Indices are available to track sectors of our economy, as well as other individual countries’ markets. Some cover geographic areas, and yet others represent specific industries.
International markets are my focus today, as recent trends have favored non-U.S. stocks for the first time in a while. Since the world is a large and complex financial amalgamation, how can an individual investor take advantage of shifts in international markets? Actually, opportunities abound.
As investment managers, we engage a wide variety of resources to track market trends accurately and dependably. Individuals can access a wealth of free information through financial websites. We always advise caution when searching the Internet, as many unreliable sources are simply there to sell their pricey services to unwary consumers.
As we addressed last week, following the U.S. Stock Market is perhaps best accomplished using Exchange-Traded Funds, or ETFs. Whether broad or by narrow segments, each index is represented by one or more unique ETFs.
Measuring and representing world economies can be done using individual country market indices. A simple search turns up virtually every country any potential investor wants to consider. Tracking the entire world except the USA is accomplished using (among others) the ETF dubbed IXUS. While the year 2026 is young and cannot reliably be considered a long-term trend, so far IXUS has outperformed our total American stock tracking ETF named SPTM by 340%.
Due to the size and complexity of stock markets throughout the world, we look to actively managed Mutual Funds for our international component of client portfolios. Selecting a favorite fund (which means selecting a favorite fund manager), is key to the process. So long as that manager continues to provide outstanding results, we track the fund’s performance and remain loyal.
Understanding shifting investor preferences helps anyone “tweak” portfolio asset allocations to accommodate trends. As the old saying goes, “The trend is your friend.”
You, as investors, are free to “play the home game,” but many studies have shown that employing competent, credentialed, and experienced professionals increases long-term results considerably. Don’t fall for the misnomer “fee-based” advisor. Look for a fee-only fiduciary advisor. Strivus Wealth Partners can help you.
“The stock market was down today,” proclaimed the 6:00 news on Friday, “as the DOW lost 285 points.” Never has this style of reporting been thorough, but in past decades far fewer Americans were active in the market. Retirement Plans morphed from our parents’ pensions, when no one cared about the internal investments, to our 401(k) Plans and IRAs, where account values are of paramount interest and importance.
“The stock market” is astronomically larger and more complex than the DOW (Dow-Jones Industrial Average, or DJIA), which is calculated using market prices of only 30 mega-companies in the USA. Complete market results are indicated by numerous Indices (or “Indexes”) for several segments of publicly traded stocks, both in the USA and throughout the world.
Knowledge of a few indices can lead to a better understanding of the complex market, and hopefully improved investment results. We’ll explain with a few examples, starting with the broad US stock market. One index for the total market is the Wilshire 5000, which is actually just a name. The index once contained over 7,500 stocks, but today has only about 3,400. This consolidation reflects recent mergers and acquisitions, as well as privatization of formerly publicly traded companies.
Perhaps the next best-known Market Index is the NASDAQ Composite, though relatively few Americans understand what it represents. “The NASDAQ” is currently comprised of about 3,320 mostly smaller companies, with a bias in favor of technology. Most Americans view NASDAQ through the lens of the largest 100 included companies, represented by the symbol QQQ.
Several indices track small companies, and a few track the smallest publicly traded American companies. Other tracking indices cover medium sized companies, specialty companies, and various segments of the market. No one should feel compelled to follow all of them, but understanding trends in various indices can improve your investing skills.
For several years, certain market segments have been outperforming others, as well as the broad market itself. Huge technology-based companies were the rage. Their performance enhanced many portfolios. Lately, that trend seems to have been reversed. Smaller (and even “Micro-Cap”) companies have been outperforming the kingpins of the recent past.
Many market watchers, professional and otherwise, are reacting to the trend. Anyone with a working knowledge of various market indices can readjust their asset allocations to ride the current wave. As always, large abrupt modifications to your asset allocation should be avoided. More discussions regarding indices will be presented in coming weeks.
Ask a number of people how they feel about declining interest rates, and you will receive a wide variety of answers. Net Borrowers (those who are repaying higher loan obligations than they currently have cash saved) will generally be elated at the prospect of declining rates. Conversely, Net Savers (those whose savings exceed their loan obligations) will generally view declining rates as a negative. Others are on the fence, with no preference.
Finding myself in the Net Saver group, I am sorry to see interest rates declining. Not long ago, we were able to receive 4.5% annual interest on High-Yield Savings Accounts. Today, rates are closer to 3.3%, a reduction of 26.7% on our monthly interest income. Since these accounts carry extremely low risk, the 4.5% rate felt like a windfall.
Interest rates are set by the market, but influenced by the Federal Reserve (FED) as they react to inflation, raising or lowering short-term interest rates, based on current economic conditions. Inflation is generally slowing down, and the FED is reacting by lowering short-term rates. Longer term rates have been following suit, with mortgage rates and bond rates declining.
A quick look at 21st Century interest rates will demonstrate how significant rate changes have been over time. The current Century came in like a lion, with average interest rates of 6.24%. By the end of the first decade, that rate had plummeted, standing at 0.1% in 2011. Rates stayed near zero until 2023, topping 2% during only 1 year, in 2019. Ensuing years saw rates over 5%, but those are currently dropping under 4%.
Higher returns are generally realized by investors willing to increase their portfolio risk. Older investors, many of whom are Net Savers, show little enthusiasm for increasing portfolio risk. Unfortunately, the tradeoff is a must for those trying to maintain or increase investment income.
Good news is available to investors willing to accept marginally higher risk. Bond prices rise inversely to interest rate changes, and are now gaining value, increasing total returns for investors. Several forms of quality Bond Funds are available to investors, and some are producing results over 4.5%.
Both Mutual Funds and Exchange-Traded Funds (ETFs) can be purchased with no transaction fees, and some of our favorites pay monthly dividends. Look for high quality investments with long track records. While these funds do require acceptance of more risk, they are designed to produce income for investors. Check with your financial advisor if you need guidance.
We understand that falling rates are making Net Borrowers happy, and we can be happy for them. However, as to Net Savers, it was fun while it lasted. Interest rate changes affect everyone.