The Confident Chronicles: March 17, 2025
Happy St. Patrick’s Day!
I feel compelled to write a mid-month Confident Chronicles due to the extreme market volatility of late.
Last week the S&P 500 dipped down into “correction” territory, meaning it fell by more than 10% from its most recent high. Some of the selloff was regained on Friday when the S&P was up over 2% in one day.
Many may be wondering:
a) what is going on?
b) how long this is going to last?
c) and how bad is the selloff going to be?
The answer to the first question is there is a lot of uncertainty in the markets right now. The markets hate uncertainty, and it creates confusion and panic. This is reflected in the volatility index, or VIX for short, which has been up over 20 since the end of February. (Anything over 20 is considered to be a “panicked market”m with large swings on a day-to-day basis expected).
The answer to B is easy.
It will last until certainty is priced back into the markets. For example, the markets don’t care if there will be tariffs or if there will not be tariffs. The markets know how to price this in. However, tariffs “on” today and “off” tomorrow create too much uncertainty. And we get volatility like we are currently experiencing.
Which leads us to question C, the selloff will continue until the uncertainty goes away. It really is that simple.
Above are the Morningstar “style” boxes showing returns for the size of U.S. stocks (Large, Mid & Small) and the categories showing a stock’s potential (Value, Core & Growth) for the past 30 days.
This chart shows me exactly what we should expect from a market selloff.
The worst performing category is the most “risky” (Small Growth) and the best performing category is the least “risky” (Large Value).
In November 2023, the PlanConfidence models moved all the US Stock categories to “Large” caps and we had zero exposure to any small or mid-sized US stocks.
This year (January 2nd) we got rid of our exposure to the Large Growth category and overweighted to Large Blend and the S&P 500.
So, while our portfolios are not immune to the market selloff, we are better positioned than if we had not made any changes.
This is why it’s extremely important to implement the changes when they are made to your account. This is why it is extremely important to get professional help with your account(s).
Cool Charts Explained: S&P 500 Chart:
Above is the S&P 500 chart for the past 365 days.
This is the chart that I use to decide if our Tactical models should be 100% invested (like our Strategic Models) or if we should be sitting on extra cash.
The S&P 500 is below its 50 day AND 200 day moving average, which is really bad.
The S&P (at a minimum) needs to claw its way above the 200-day moving average this week, or I fear we will quickly devolve into a “Bear” market (down 20% or more).
However, due to Friday’s market rally, the S&P is trending upward toward the 200 day, which is good!
The other large problem with this chart is the MACD (bottom of the chart). The red line is above the black line, which is bad.
Again, due to Friday’s market rally, we have seen the first tick up of the black line, which is good. We want that black line to cross through the red line and that will show momentum, and upward market prices are returning.
So, I will not speculate on which way we are headed, because that is a fool’s task.
I will tell you all this will end when we get “certainty” back in the markets. I have no idea how long that may take.
But rest assured, we have been making moves to help you professionally manage your workplace retirement plans just like the largest financial institutions managing money have been. And we will continue to do so to ensure that you have confidence in your plans!
And I want to let you know about one of the most positive aspects of a falling market.
That is, every time you get paid and add money to your plan, you are buying new assets “on sale”. You will own a lot more shares due to the falling prices than you would have if the market continued to go up.
This is the silver lining to market volatility.
Your “Future Contributions” (money going into your plan with each paycheck) take on a much larger role in the value of your future retirement account during market downturns.
So, don’t stop contributing in times of uncertainty!
Follow the advice you are receiving, as you buying shares cheaper than they were a month ago. And this is good thing!
We all want you to retire confidently, even as the uncertainty persists!
So, if you have any concerns, please talk to your advisor.
Now could be a great time to review your risk model to ensure your advice is aligned with your tolerance for risk.
This update has been written by Kevin T Clark, RF™.
Kevin T Clark, RF™ is the CEO and Co-founder of Plan Confidence Corporation.
All opinions expressed are those of the author and not that of Plan Confidence Corporation nor any other firm or individual.
Kevin is an “ERISA Nerd” and one of only a hundred(ish) Dalbar certified Registered Fiduciaries (RF™) in the United States.
He has been helping hard working Americans invest their money since 1997!
Plan Confidence Corporation is an SEC registered “internet only” investment firm specializing in providing advice to hard-working Americans investing in their employer’s retirement plans (401k, 403b, TSP, etc).
They have created proprietary software so hard-working Americans can receive professional, ongoing advice on their employer’s retirement plan from an adviser of their choosing!
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