There’s always a lot happening in the world, but the volume feels especially loud right now. It’s natural to feel like you should react, but history shows that short-term moves rarely pay off. Here is the big picture at a glance, with a deeper dive below:
- History is constantly being written. While today’s events will shape history, most of it is just noise when it comes to your investment strategy and long-term financial plan.
- Every day, we make an active choice: adjust course or stay steady. More often than not, staying the course is the right move.
- Diversification helps in volatile times. So far this year, international stocks and bonds have cushioned much of the U.S. market’s correction.
- If anything truly requires action, we’ll let you know, that’s our job. We want you to stay focused on what truly matters.
2025 So Far: Investing in an Era of Noise
If you’re a consistent follower of the news, or just a human who exists these days, the noise has gotten much louder than it has in a while. The headlines scream about tariffs, DOGE and global conflicts with heavy uncertainty about what tomorrow will bring. The sheer volume of information, much of it speculative or reactionary, can make it feel like you should be doing something with your portfolio in response. Despite the headlines, your portfolio is built to withstand the noise. As frustrating as it may be, the evidence overwhelmingly supports our strategy: diversify, follow the data, and avoid emotional reactions.
Whether the noise is loud or not, there are always risks in the economy, some real, some exaggerated. TCI’s investment philosophy is based on core principles, one of which is that no one can predict unexpected changes over the short-term with certainty. Changes in interest rates, currency fluctuations, corporate earnings, inflation spikes, world conflicts, these are all variables that even the most seasoned experts struggle to forecast correctly. To get slightly more nuanced, it’s extremely difficult to make forecasts that outperform conventional wisdom, yet that’s what’s required to consistently beat the market.
So, what do we do in times like these? We focus on what we know, and more importantly, what we can control.
The Trump-Media Effect: Why the Noise is Louder Than Ever
One of the biggest challenges investors face today isn’t market volatility itself, it’s how loud everything has become. The dynamic between President Trump and the media amplifies every development into a must-watch event. Add in that “breaking news” is constantly pushed to us on our devices, and it’s easy to feel like chaos, particularly financial chaos, is just around the corner.
Here’s the reality: the vast majority of what you hear is noise as it relates to your long-term investment strategy.
To simplify things, markets operate with two types of investors, short-term speculators and long-term investors. Rapid developments such as tariffs, world events, inflation, and government spending would make us dramatically rethink our investment strategy every day if we were in the former camp. Rest assured, as TCI clients, you most certainly are not. We are long-term investors for the stock portion of our portfolio and these constant changes don’t change our long-term outlook. We own a slice of future economic progress across decades through a well-diversified portfolio of global companies.
Of course, I hear the words of my wise aunt ringing in my ear, “Sam, I don’t have a long time, and I am concerned now.” To the extent you’re not a long-term investor, that’s why we diversify our portfolios with bonds and cash. You’ve likely worked closely with your advisor to determine the right mix for your unique situation based on a variety of factors. Bonds are extremely unlikely to move with the volatility of the market and remain your best protection for your shorter-term spending needs.
Portfolios Designed to be Resilient
If there’s one thing we know for sure, it’s that uncertainty isn’t new, it’s the default state of the world. That’s why TCI’s investment approach isn’t based on short-term predictions. Instead, we design portfolios that can weather any environment, whether the next 12 months bring inflationary pressures, interest rate shifts, or corporate earnings surprises.
Our strategy is built to be resilient, so you don’t have to react to every news cycle or political headline. That doesn’t mean we aren’t paying attention. It means that we act only when it’s prudent, not when the noise is at its loudest.
Though it’s a short time period, both bonds and international stocks have been positive in 2025, while the U.S. stock market remains in correction territory, down 10% from its peak. Diversification is always our friend, but especially in volatile times.
What Should Investors Do?
The best thing you can do as an investor is stay focused on your long-term goals and ignore the noise. Markets go through cycles, and while uncertainty can be uncomfortable, history shows that disciplined investors are rewarded over time. Many of you have been through multiple scary times: the dot-com bubble and September 11th, the Great Recession and a global pandemic. As those moments fade into time they become blips in your long-term plan. COVID’s impact lasted over three years, yet the market recovered to pre-crash levels in about five months and hit new highs within nine.
Looking back and “zooming out,” it’s hard to even pinpoint where some of the worst pain was felt when you examine a long-term market chart from Dimensional Fund Advisors. Yet, in that moment, those downturns felt far more intense. Humans are wired to feel the pain of a loss more acutely than the satisfaction of a gain, a concept so well-documented, it’s a cornerstone of behavioral finance.
Monthly S&P 500 Growth from January 1, 1926 to February 28, 2025
Chart courtesy of Dimensional Fund Advisors.
Whether you are optimistic or concerned about the state of the world, please don’t take this as a dismissal of the important developments happening. Decisions and events to come will certainly affect world history, it’s just that they remain largely short-term noise as it relates to a prudent investment strategy. Remember, uncertainty will always be part of investing, but your portfolio is built to navigate it. Our team is here to provide guidance, answer any questions, and help you stay focused on your long-term goals. If anything requires action, we’ll let you know.
Until then, try and let the noise stay in the background. You have a partner in TCI and we are ready and available for you whenever you need. We’ve got this and are here for you.
