Navigating Market Volatility: A Long-Term Perspective

This correspondence was distributed to clients on March 14, 2025.

In recent years, the global economy and stock markets have demonstrated resilience, fueled in part by stimulus programs implemented during the height of the COVID-19 pandemic. These measures provided critical lifelines, preventing a more severe economic downturn. However, as the economy moves forward, policymakers are shifting their focus toward long-term financial stability, leading to adjustments in government spending and trade policies.

 While responsible fiscal management is essential—whether in government, business, or households—the path to achieving it can sometimes be turbulent. Recent efforts to reassess trade agreements and curb spending, while necessary, have introduced uncertainty and volatility into the markets. When such policy discussions unfold publicly, investor sentiment can be affected, contributing to market fluctuations.

Market Corrections: A Natural Part of Investing

The recent ~10% pullback in the S&P 500 serves as a reminder that market corrections are a normal part of investing. Historically, declines of this magnitude occur approximately every 18 months. These periods of volatility help reset valuations and curb excessive speculation.

From our perspective, based on over 50 years of market experience, corrections typically run their course in the short to medium term. As uncertainty eases, investors often refocus on corporate earnings and broader economic progress, which drive long-term market performance.

Staying Focused on the Fundamentals

It’s important to remember that investing is about owning shares of real companies—businesses driven by innovation, strategic execution, and long-term value creation. While markets can be unpredictable in the short run, strong businesses continue to grow and adapt over time.

For long-term investors, patience and discipline are key. Staying the course, despite periods of volatility, has historically rewarded investors who focus on quality businesses and sound financial principles.

If you have questions or concerns about your investment strategy, we’re here to help. Reach out to us to discuss how to align your portfolio with your long-term financial goals.

Disclosure:

Kimelman & Baird is not affiliated with Fidelity Investments. 

This communication has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. All information or ideas provided should be discussed in detail with an advisor, accountant, or legal counsel prior to implementation. Investing involves risk including the possible loss of principal. Past performance is not a guarantee of future results or success. Actual results could differ materially with each client.