By Craig McAvinue – 4 May, 2025
"The average man tends to buy high and sell low"
So April saw a bit of a mixed bag though overall gains and losses for the month fairly modest….unlike what many would have you believe.
Undoubtedly the “Tariff tango” being a factor, the US Dollar continued its decline as investors lacked confidence in the usual safe haven….
Data from Google Finance
April 2025 saw the S&P 500 once again experiencing significant volatility driven primarily by uncertainties surrounding U.S. trade policies and tariff announcements. Despite a challenging start, the index managed to recover from early losses, ending the month with mixed performance across sectors.
As long as Donald Trump holds office, volatility is going to be higher. We must not forget however that volatility is inherent in the equity markets anyway and much of the rhetoric I hear in the media is politically driven.
Whatever the agenda of the speaker can lead many people to believe in a distorted reality. I recall hearing one commentator recently (anti Trump) talking about how “Trillions of Dollars” have been wiped off of US retirement funds due to this current government’s economic policy.
In the true sense of the word at that particular point in time, yes this is true, with the market capitalization of the S&P 500 sitting at around US$50 trillion. Its all-time high in Mid January was US$54 Trillion so therefore US$4 trillion less. However, a good trading week can see US$1-2 trillion dollars back in these “US retirement funds”. Perspective.
The reality of these falls were more likely linked with the amazing growth of the Magnificent Seven over the last couple of years, so there were easy profit taking opportunities. My role is not to make a judgement call or share an opinion on whether I think Trump’s policies will be good or bad for the economy, it’s just to point out that politics and the growth / decline of your share portfolio are not as intrinsically linked as many would have you believe.
Buying good companies managed by good managers with a long term view is the way to make money. All too often I hear people saying things like they want to wait until things “settle down” before buying. This strategy never works. In the words of the great Warren Buffet, “It’s time in, not timing” the markets which leads to success. As we write, it seems like quarterly earnings that are being released are generally good. Again good companies, growing their revenue and profits. This is where smart money goes regardless of what noise is being made.
Granted, the first quarter GDP estimate, released on April 30, showed a contraction of -0.3%, significantly below Wall Street’s expectation of a 0.4% gain. Though jobless claims for the came in at 215,000, better than the expected 225,000, suggesting labour market resilience.
With the first of May marking Labour Day in many countries (it is a public holiday in 80). Employment and unemployment rates are a significant indicator of economic health albeit not the sole driver of success or failure.
Better consumer spending and demand, less pressure on government finances, Social and economic stability and productivity and investment are all examples of how lower unemployment helps an economy to grow.
Over the last 20 years, the average unemployment rates in the US, UK & EU respectively have been 5.6%, 5.3% and 8.5%. As of today we are sitting at 4.2%, 4.4% and 6.1%, all significantly lower than this average. So maybe something (and somebody) is working.
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