Goodreid Blog
As markets continue to notch new all-time highs in both the U.S. and Canada, the tariff limbo we endured in April feels like a distant memory—despite being only eight months behind us. As long-term investors, our job extends beyond identifying attractive opportunities; it includes reminding clients that the strong returns we strive for can only be captured by those who stay invested. The chart below offers a clear reminder of the remarkable turnaround we have witnessed in 2025 as solid fundamentals ultimately overpowered tariff-related concerns.
As markets continue to notch new all-time highs in both the U.S. and Canada, the tariff limbo we endured in April feels like a distant memory—despite being only eight months behind us. As long-term investors, our job extends beyond identifying attractive opportunities; it includes reminding clients that the strong returns we strive for can only be captured by those who stay invested. The chart below offers a clear reminder of the remarkable turnaround we have witnessed in 2025 as solid fundamentals ultimately overpowered tariff-related concerns.
Source: Bloomberg, Goodreid
This was precisely the message of our April e-article, where we outlined our views on tariff risks and emphasized our discipline in staying focused on fundamentals rather than reacting to negative headlines. As is often the case, investors who sold out of equities in April out of fear are now regretting that decision, while those who simply stayed the course are in a far better position today. These moments of turbulence highlight the value of a well-structured personal investment policy. A disciplined plan and appropriate asset mix allow investors to ride out volatility, as panic selling all but guarantees missing the recovery. The chart below illustrates this vividly: missing just a handful of the market’s best days can dramatically reduce long-term returns. A timely example occurred this year—the market bottomed on April 8th, and the S&P 500 surged 9.5% the very next day, one of its strongest single-day gains in history.
Source: Invesco
Event-Driven vs. Economic Market Environments
In addition to our conviction to stay invested, Goodreid differentiates between event-driven market volatility and economically driven market cycles. Event-driven markets, such as those driven by tariffs, political headlines, or temporary shocks, tend to be reactionary and characterized by short-lived spikes in volatility. In these instances, our approach is typically agnostic; we avoid trading around short-term noise and instead maintain focus on company fundamentals.
Economic cycle shifts, by contrast, evolve over longer periods and reflect meaningful changes in economic conditions. During these transitions, Goodreid will adjust portfolio positioning along the risk and quality spectrum to better reflect the underlying environment. While we respond thoughtfully to true economic turning points, we remain disciplined and patient during event-driven periods.
Market Psychology and the Lifecycle of Stocks
Market psychology also plays a powerful role in the movement of stock prices. Enthusiasm can grow into mania, leading to momentum trading where valuations become detached from fundamentals. Eventually, prices must reconcile with reality. In extreme cases, this can lead to market bubbles that unwind through abrupt corrections. More often, however, the fear of a bubble is enough to trigger a normal corrective phase.
Why Corrections Matter
Corrections are both frequent and healthy. Historically, markets experience a 10%+ correction approximately every 24 months. These periods restore balance by realigning valuations with underlying fundamentals. When corporate profits remain strong, an environment we continue to see today, corrections can resolve even faster. Falling prices combined with rising profits can accelerate the normalization of valuations, positioning investors well for the next leg of long-term growth.
Despite ongoing concerns, ranging from elevated valuations and AI-driven enthusiasm to government fiscal debates and softening economic data, the list of worries is never truly empty. What remains constant is our commitment to focusing on fundamentals and owning high-quality businesses within a diversified portfolio. This disciplined approach remains the most reliable path to mitigating risk and achieving attractive long-term returns.
