The pumps, slumps, and bumps of 2025
The ASX200 has already surpassed pre-Trump ‘Liberation Day’ highs.
Who would have thought that we’d bounce back so strongly from Trump’s touted ‘Liberation Day’ tariff rollout? The ASX200 is now higher than when the tariffs were announced on April 2nd. It looks like it’s on track to set a new all-time high.
The longer I’m involved in financial markets, the more I learn about the psychological experience of significant sell-offs. Our brains can’t help but focus, focus, focus on the pain. Inevitably we lose perspective.
Financial markets tend to drift higher, and plunge lower. Or in more colloquial Wall Street parlance, “bull markets take the stairs, bear markets take the window”. This makes it hard to behave appropriately and shows the importance of having a plan in place to deal with inevitable crises.
Here are four key takeaways that I have from this recent slew of pumps, slumps, and bumps:
1. Persevere with optimism
History is testament to the power and hope of human industry. Share markets are volatile in the short-term, but long-term they yield the value of improved productivity, technological evolution, and cooperation.
2. Understand the foundation
The foundation of our investment strategies is the inherent value of the assets we own. Businesses generate profit, properties generate rent, and loans (savings) generate interest. These have value, irrespective of what the market is willing to pay on any given day.
3. You don’t have to sell
If the market is having a tantrum and won’t pay a fair price for the assets that you own, you don’t have to sell them. The greatest risk in long-term investing is selling out in a fearful market, then trying to time a re-entry into a recovering market.
4. Focus on the fundamentals
Everyone seems to become an expert in macroeconomics and geopolitics when markets get wobbly. The reality is, our world is so complex that it’s almost always a waste of time speculating on the basis of changing trade regimes, commodity prices, and Presidential edicts.
As investors, there are many things that we can control. Our emotions are part of that mix (although not entirely, if we’re honest). A good financial plan is built on clear goals, timelines, risk profiles and income needs. If our investment portfolios are built sensibly along these lines, it’s more likely we can live the lives we want to live. This is the whole point of our money anyway. Getting carried away in the details of Trump’s tweets and the gold price isn’t constructive for the bigger picture.
At Synectic, we want to help our clients “make the most important thing the most important thing”, and tune out the noise of 24/7 news cycle and doomsday prophets. We do this by ensuring we have a sound financial plan in place for you, a good mix of productive assets, and a steady hand when things get dodgy.
Need help with your financial plan? Contact a Synectic adviser today.
