This Week in Review | Tariffs Rattle Global Markets, Why Patience Pays, FR Politics (Apr. 4, 2025)

Transcript

Ben Thistlewaite:

Hello, and welcome to This Week in Review. This weekly segment is designed to highlight a few important developments that you might have missed this week. We'll talk about what they mean for markets, economies, and, most importantly, the potential impact for investors. Now let's review what happened this week.

First, global tariff developments.

On Wednesday, President Trump announced a broad new round of tariffs and markets reacted sharply negatively to the news—falling back into correction territory. While it's certainly natural to feel concerned during moments like these, we strongly urge investors not to make quick investment decisions based on any type of short-term market volatility. The proposed tariffs, as they stand, could represent a meaningful headwind to the global economy, if they're fully enacted. That said, there's a long way to go before these measures would fully materialize, and as our Founder and Co-Chief Investment Officer, Ken Fisher, shared in a recent appearance on Fox Business' Varney and Co., legal challenges or pushback from Congress may alter or slow these measures, or other nations may opt to negotiate rather than retaliate, which could further ease tensions. Even if some tariffs take effect, enforcement hurdles, company workarounds may ultimately reduce their impact. Plus, when you consider the over $100 trillion size of the global economy, the maximum estimated tariff payments still actually don't appear significant enough to automatically trigger a global recession. History has shown us time and again that markets often overreact initially, pricing in worst case scenarios that rarely come to pass. This actually helps reset investor sentiment and makes it easier for reality to positively surprise to the upside. And as we'll unpack further in a moment, good years don't necessarily mean calm years for markets. While no one can predict what stocks will do in the short run, our broader market outlook remains positive.

Next, why patience pays in volatile markets.

Now, we've all felt it. That urge to make a quick decision when markets drop. But here's the thing to remember—selling during a steep decline can often carry greater risks than staying invested. Historically, the biggest market rebounds tend to happen right after major declines. Since 2009, the S&P 500's 50 largest days clustered in the aftermath of corrections and bear markets. Missing just the 10 best days in the market over the last 35 years, would have cut your cumulative returns by more than half. And that's a huge risk most investors don't fully consider or appreciate. Wanting to avoid corrections feels like you're protecting yourself from the discomfort of seeing your portfolio drop, but timing the market is incredibly tricky. The downswings in their recoveries often move very quickly, sometimes in just a matter of days. And as we said, missing even a few of those big rebound moments can have lasting impacts on your long term returns. And don't forget, while parts of the world have experienced prolonged struggles, historically, global markets—despite all types of downward volatility— have always recovered and gone on to make new highs. In our view, staying the course amid volatility makes sense for long-term investors, even when it feels challenging.

And finally, French politics.

Earlier this week, French National Rally leader Marine Le Pen was convicted of embezzlement. She's been handed a fine, a prison sentence and been banned from running for public office for five years. This effectively removes her from the 2027 presidential race, at least for now. Le Pen plans to appeal, but in the meantime, her National Rally Party is facing some uncertainties, including questions about whether its current president, Jordan Bardella, can win over the broader electorate. While this development has created political ripples in France, it's really important to keep the broader context in mind. The next French presidential election is years away, and a lot can change politically between now and 2027. So, while domestic politics in any country can create headlines and spark all kinds of speculation, it's essential to look at the bigger picture. And the bigger picture in Europe right now is that broader political and economic trends are proving much more stable and supportive for markets than most anticipated earlier this year. That's a really positive sign for European stocks, and a reminder on why staying focused on long-term trends matters.

That's it for this week.

Thanks for tuning in to This Week in Review. If you're looking for more insights, then don't miss our other series, 3 Things You Need to Know This Week. That's released every Monday. You can also visit fisherinvestments.com anytime for our latest thoughts on markets. Thanks again for joining us and don't forget to hit "like" and "subscribe"!