Dear Client, Prospect, Partner:
The Trump bump has disappeared and in its place are market volatility and pain that we haven’t seen since 2020 during the COVID crisis. There are also not many places to hide. The volatility on Monday and Tuesday from the market open to market close has been unbelievable. To some extent, we think this was expected and potentially healthy for our highly valued and highly appreciated U.S. stock market. Now, we stayed the course in 2020, and it turned out to be a phenomenal year of market growth. This time: it may be different. It could also be a huge opportunity for investors.
Peter Lynch, former manager of the Fidelity Magellan Fund from 1977-1990, had the well-known quote of “invest in what you know.” I adopted that a long time ago and have stayed true to it. Mr. Lynch had an annualized return of 29.2% during those years, which is pretty phenomenal. He also mentioned in 100 years of stock market history you’re going to have 50 years of declines of 10% or more, with 15 of those 50 years dropping 25% or more. Markets go down but they also come back up. If you can’t handle that kind of volatility, you probably shouldn’t be investing in equities. You need patience in uncertain times or maybe better said, uncomfortable times. That’s what we’re doing here. It’s tough navigating these markets, but we’re sticking to what we know and what we’ve learned over 25 years in the industry.
President Trump is following through on exactly what he said he’d do during his 2024 campaign. He feels that the U.S. has been cheated for way too long on global trade, so he is implementing Tariffs. Twenty-five percent on Canada and Mexico, of which almost half is for steel and aluminum and up to 54% on China with the reciprocal tariffs taking place on April 9th. These tariffs are being used as bargaining tools to extract economic concessions. President Trump likes to negotiate and “make deals” and that is what he is intent on doing. These tariffs are wide-reaching and harsh, but the good news is this should be the worst of it this week. Lower trade barriers are the goal for this administration. Many countries are already communicating and negotiating with the White House at the drafting of this letter. This volatility will reside soon, and we can get back to some normalcy in the markets.
Non-farm payroll employment rose by 228,000 in March and the unemployment rate changed little at 4.2%, the U.S. Bureau of Labor Statistics reported last week. Job gains occurred in health care, social assistance, transportation and warehousing. Employment also increased in retail trade, partially affected by workers returning to work from a strike.
Sincerely,
J.B. L’Esperance, ChFC
If you have questions about our strategies or would like to open an account with Barking Sands Capital, please give us a call at 952.500.8854 or 248.687.1400 or email us at jb@barkingsandscapital.com.