It is our pleasure to provide you with another edition of our mid-year report. We believe it is always beneficial to review the first six months of what has been a very eventful year, before setting our sights on the horizon of the second half of the year.

As always, let's first remember the timeless truths for enduringly successful wealth management; the principles that guide our work together toward your financial goals. Then we can proceed to our observations and commentary on the current economic landscape.

General principles

We are goal-focused, plan-driven, long-term investors. Our portfolios are derived from, and driven by, your most important lifetime financial goals, not any current view of the economy or the markets.
We do not believe the economy can be consistently forecast, nor the markets consistently timed. We do not believe there is any advantage to be gained by going in and out of the market, regardless of current conditions.
We therefore believe that the most practical method of capturing the premium long-term return of equities is by consistently remaining fully invested.
We are prepared to ride out the equity market's frequent, often significant, but historically temporary declines.

Current commentary

If you looked at the equity market on the first trading day of this year and not again until the end of June, you could be forgiven for concluding that it had been a prosperous, and uneventful, first half of the year. In fact, a great deal happened; but at least so far, to no lasting effect.
The S&P 500 Index closed at a record high on February 19th. By April 8th, it had closed 18.9% lower. Even that drastic dip doesn't fully express the degree of sheer panic (there's no other word for it) that enveloped the markets upon President Trump's announcement of a dramatically increased tariff protocol on April 2nd.
The panic ended just as abruptly as it began after Mr. Trump announced a 90-day postponement of most of the new tariffs. In the seven weeks or so since then, the Index returned to the neighborhood of its early January levels.
As it often is, the optimal course of action for long-term investors was simply to continue on with your plan. That's what we encouraged you to do, as we always have, and as we will continue to do for the second half of the year. Please don't mistake this for an economic forecast or market outlook. We have no such forecast for the next six months, any more than we did on January 1st.
Our only forecast is that excellent businesses of the kind we invest in will continue innovating over time, likely increasing their earnings, raising their dividends, and supporting our clients' pursuit of their long-term goals.
Panic doesn't often seize the investing public as suddenly as it did in the first week of April, nor vanish as suddenly as it did the following week. Still, this episode can and should serve as a reminder that these types of events will always occur during an investor’s lifetime.
The lesson we can take from this is that investors succeed over time by continuously working their plan regardless of the current “crisis”. Others fail by reacting to negative events and liquidating even the highest quality equities at panic prices. We believe that is the fundamental choice in investing, and that our mission is to help you continue to choose wisely.

We welcome your comments and questions. Thank you, as always, for being our clients. It is a privilege to serve you.

Sincerely,

Your Windward Private Wealth Management Team

Insights