RVW portfolios are by design, diversified and resilient. Plunges of this nature in equity prices tend to take place at least every decade or so and are taken into account in our planning. Our ETF equity exposure is based on selecting groups of companies possessing attributes or “factors”, rather than individual stock selection. We focus largely on attributes such as growing dividends, profitability and value. This Darwinian best-of-breed methodology ensures that our exposure is regularly tending to move away from losing companies and towards the successful ones, in a tax-smart manner.
In times of uncertainty and radical change, there are always companies that do well, in this case especially those that stand to benefit from protection against foreign competitors.
RVW WEALTH: THE TRUMP TARIFFS: ECONOMIC & INVESTMENT IMPLICATIONS
WHAT TO DO NOW? HISTORY TEACHES US TO STAY THE COURSE, BUCKLED IN FOR THE BUMPY RIDE
“Volatility is the price of admission—the prize inside is superior long-term returns.” – Morgan Housel
At multiple points during our investing lives, the market throws tantrums. Portfolios are bleeding, and panic seems to be setting in. Human nature is not wired for uncertainty. Our ancestors survived by reacting quickly to threats. A rustle in the bushes meant danger. In today’s markets, a red ticker has the same effect. Selling feels like action, and action feels like control. But most of the time, doing nothing is the action. It’s the hardest thing to do, and historically the most effective. The real cost of investing is emotional discomfort. Every seasoned investor eventually learns that the biggest risk isn’t external. It’s internal. It’s not inflation, recessions, geopolitics, or tariffs that derail wealth creation, but ourselves, acting on emotion instead of reason.
Staying the course means that there is a plan in place that accounts for tough times, because tough times are always part of the process of long-term equity investing.
Now, what does staying the course look like?
- Do nothing when tempted to do something. When everything is red, the urge to sell will feel rational.
- Avoid checking your portfolio too often. If your investment horizon is long term, daily or weekly price movements are irrelevant. They only serve to mess with your emotions.
- Tune out the noise. Financial media thrives on panic.
- Focus on process, not outcomes. A well-thought-out investment process will occasionally lead to short-term pain. Your financial plan takes that into account.
THERE ARE DECLINES EVERY SINGLE YEAR – AND THEY AVERAGE 14%.
For successful long term investors, they have given up the past year or 18 months of gains.
CHARTING THE PROBLEM
Note the massive imbalance and the growing trade deficit.
We have been buying from these countries and sending Treasury Bills in payment.
The Top 3 Countries:
The problem is both governmental and societal.
THE POEM THAT WARREN BUFFETT SUGGESTS WE READ AT TIMES LIKE THIS:
THE GOOD NEWS
Most of the valuable global brands are American.
Household finances are solid.
Consumer spending constitutes about ⅔ of the US economy.
The US is not very dependent on international trade and is largely self-sufficient.
1
The incorporation of AI into the economy promotes efficiency and profitability.
The US leads the world in healthcare.
ESSENTIAL VIEWING
This award-winning documentary deals with the evolution of what is now called “The Science of Capital Markets”.
We are proud of our decades-long association with Dimensional (DFA), whose ETFs are incorporated in almost every RVW portfolio.
Click here to watch.
AMERICANS BUY A CRAZY AMOUNT OF CHEAP STUFF. IT’S COSTING US DEARLY
[Source: WSJ]
Our mountain of clutter remains, even if tariffs bring an end to the era of low-cost goods.
- Americans in 2024 bought 5.7 times as much flatware and dishes and 3.5 times the furniture compared with 1994, according to Commerce Department data. They purchased 2.5 times the clothing and footwear.
- Putting belongings in one of the country’s roughly 58,000 self-storage facilities costs $151.50 a month on average, according to Storable, a company that provides management software for self-storage facilities.
- Downsizing a home takes as much as 40 hours, nearly double the time it took a decade ago, according to the National Association of Senior and Specialty Move Managers. Many hire professionals to help.
- U-Haul increased the size of its largest moving trucks by 60% between 2014 and 2024 to reflect Americans’ growing volume of possessions, according to the company.
- Some 71% of Americans in a recent Storable survey said they repurchase items they already own because clutter keeps them from finding the original.
WE HAVE SEEN THIS PLAY BEFORE. IT REPLAYS EVERY DECADE OR SO.
Here is the classic end of the bull/bear contest.
FUTURE-FOCUSED INVESTING: RVW’s FOCUS ON INFRASTRUCTURE
https://www.bcg.com/press/17march2025-private-equity-infrastructure-investment-renewed-growth
- Investor interest in digital infrastructure is growing with data center investments surging due to AI-driven demand.
- Funds are evolving their strategies, leveraging new investment structures and operational efficiencies to enhance returns in a maturing industry.
WHAT WE’VE LEARNED FROM 150 YEARS OF STOCK MARKET CRASHES
Though they varied in length and severity, the market always recovered and went on to new highs.
Though the initial downturn on March 9, 2020, was dramatic—the US stock market lost nearly 8% in one day—the US stock market ultimately recovered from that crash in just four months, making it the fastest recovery of any market crash over the past 150 years.
Not even two years later, the stock market experienced a worse downturn: The market took 4 times as long (18 months) to recover from the crash of December 2021, spurred by the Russia-Ukraine war, intense inflation, and supply shortages.
So, with these recent market crashes behind us, what have we learned?
- It’s impossible to predict how long a stock market recovery will take.
- If you don’t panic and sell your stock holdings when the market crashes, you will be rewarded in the long run.
HOW FREQUENT ARE MARKET CRASHES?
The number of market crashes depends on how far back we go in history and how we identify them.
In the chart below, each bear-market episode is indicated with a horizontal line, which starts at the episode’s peak cumulative value and ends when the cumulative value recovers to the previous peak. (Note that we use the term “market crash” interchangeably with bear market, which is generally defined as a decline of 20% or more.)
When you incorporate the effect of inflation, one dollar (in 1870 US dollars) invested in a hypothetical US stock market index in 1871 would have grown to $31,255 by the end of January 2025.
The substantial growth of that $1 highlights the enormous benefits of staying invested for the long term.
Still, it was far from a steady increase over that period. There were 19 market crashes along the way, with varying levels of severity. Some of the most severe market crashes have included:
- The Great Depression, which began with the crash of 1929. This 79% stock market loss was the worst drop of the past 150 years.
- The Lost Decade, which included both the dot-com bubble burst and the Great Recession. Though the market began recovering after the dot-com bubble burst, it didn’t climb back to its previous level before the crash of 2007-09. It didn’t reach that level until May 2013—more than 12 years after the initial crash. This period, the second-worst drop of the past 150 years, ultimately included a stock market loss of 54%.
- Inflation, Vietnam, and Watergate, which began in early 1973 and ultimately led to a stock market decline of 51.9%. Factors that contributed to this bear market include civil unrest related to the war in Vietnam and the Watergate scandal, in addition to high inflation from the OPEC oil embargo. This market downturn is particularly relevant to today’s environment, given issues like the recent inflation surge and the Russia-Ukraine and Israel-Hamas wars.
As trained Personal Financial Planners, our team stands ready to provide guidance and counsel in all related matters. We are deeply grateful to those who referred friends and family members to us. RVW is about providing a successful investment experience. That means more than just returns. It means providing peace of mind because you know that a transparent process backed by decades of research is powering every decision.
Sincerely,
The RVW Wealth Team:
Selwyn Gerber, Jonathan Gerber, Loren Gesas, Mary Ann Moe, Simon Liu, Jesse Picunko, Dylan Scott, Simmons Allen, Morgan Vickers, Kelly Sueoka, Shuey Wyne, Joseph Woods, Doug LaCombe, Jeffry Niedermeyer, April Taylor, Donovan Schafer, Mitchell Bentley and Kelly Richardson
FOR IMPORTANT CURRENT COMPLIANCE AND DISCLOSURE INFORMATION GO TO http://www.rvwwealth.com/compliance
NOTE: The information provided above is not complete, may be erroneous, and omits important data. The charts are estimates and may contain inaccuracies or distortions.
Read and rely exclusively on actual offering documents and on statements received directly from your custodian. The report prepared by us is to highlight aspects of your investments but is incomplete. No decision should be made, or action taken based on it. Advice not provided in writing cannot be relied upon. Investments are not guaranteed and may lose value. Past performance is not indicative of likely future returns.