Good afternoon,
As I write this, global share markets are experiencing a sharp and swift correction — now approaching bear market territory, with nearly a 20% decline from the 19 February 2025 high.
The catalyst is the Trump administration’s proposed global tariff regime. Thus far, the market reaction has been significant. Importantly, markets don’t react to facts — they respond to perception. When that perception is shaped by uncertainty and misleading narratives, fear takes hold, triggering widespread selloffs.
Naturally, the question arises: “how much further could markets fall?”
Over the weekend, I read with interest President Trump’s call for Americans to “hang tough” on tariffs. This raised the question: is this simply a hardline negotiating tactic designed to influence global trade terms — or something more disruptive? Trump has a history of bold, confrontational strategies from his days in the New York property market — we may be seeing the same playbook here.
The answer for now? Nobody knows.
But we do know this: we’ve been here before.
Think back just five years to the early days of COVID-19. From February 20 to March 31, 2020, global markets fell between 30–35% depending on the region. Yet by July 2020, many markets had fully recovered. As quickly as markets fall on fear and uncertainty, they can rebound just as fast. Missing those early recovery days can have a significant long-term impact on portfolio returns.
Some may argue, “This time it’s different.” And while every crisis is unique in its cause, none have been different enough to permanently derail the long-term innovation and performance of the world’s great companies — a point echoed in Nick Murray’s recent essay, “The Market is Inviting You to Make the Big Mistake.” Nick Murray is a US based market commentator that I subscribe to. (Two-minute read, link at the bottom of this email).
So, what should we do?
Stay the course.
Our investment committee is meeting daily to monitor portfolios. If there was ever a time to reaffirm our key wealth management principles, it is now:
- Stick to the plan. You have a long-term investment strategy aligned with your personal goals. Trust the process and the portfolio managers and tune out the background noise.
- Don’t try to time the market. The economy cannot be forecast with certainty, nor can markets be timed reliably. Selling assets to fund lifestyle needs during downturns locks in losses and hinders recovery.
- Remain diversified. Avoid chasing market fads or “unicorn” asset classes. A diversified portfolio remains your best defence.
- Rebalance with discipline. Periodically adjust portfolios to their target risk profile, while maintaining adequate cash reserves for ongoing living expenses.
- Market corrections are normal. On average, markets correct by 15% annually and experience deeper pullbacks roughly every five years. What we’re seeing now is consistent with long-term norms.
- Ride this out — together. Volatility is uncomfortable, but enduring it is the price we pay for long-term growth.
If you have any further questions, please do not hesitate to contact our office on 02 9899 6077 or email MNAM@matrixnorwest.com.au
Regards,
Matthew Stevenson
Head of Advice