Lessons from the not-do-distant past
Cast your mind back to President Trump’s first term. In 2017, the administration identified China as a key target for trade policy changes; by 2018 it began imposing significant tariffs across a range of Chinese products. What followed were two years of complex trade negotiations that eventually resulted in the “Phase One” agreement (although many pre-existing tariffs remained in place).
Yet, during this period of trade tension and uncertainty, both the US and Chinese markets demonstrated resilience. Over Trump’s four-year term, both countries posted higher cumulative returns than the MSCI World ex USA Index. This serves as a reminder: Markets often respond differently than headlines would suggest.
Recent market performance
Looking at recent market performance across key regions in their respective currencies reveals challenging conditions that have tested investors’ resolve:
New Zealand: The NZX 50 has dropped over 6.63% in the first quarter of 2025. Rising interest rates in recent years and economic uncertainty have particularly impacted the property and retail sectors, with the index hovering around 20% below its all-time high in 2021.
Australia: The ASX 200 also struggled, down nearly 5.99% year-to-date and experiencing one of its longest losing streaks in 15 months. Mining stocks, traditionally a cornerstone of Australian markets, have seen substantial declines with the S&P/ASX Resources index down over 20% over the last year as concerns about global growth and demand intensify.
United States: Despite its reputation for resilience, US markets have not been immune to pressure. The S&P 500 has retreated nearly 14.04% from its recent peak, while the tech-heavy NASDAQ has experienced more pronounced volatility with a pull back from its high of 18.35% during recent months.
Fixed Income: Government and high-quality corporate bonds have emerged as relative safe havens amid the market turbulence:
- New Zealand corporate bonds returning 1.47% year-to-date compared to negative equity returns.
- While US 5 Treasuries have gained 3.27% year-to-date as investors seek protection from market volatility.
Bonds may lack the sizzle and excitement of equities, but they function much like the keel on a yacht. While they might slow a vessel in calm waters, they provide the stability and ballast to protect it against capsizing in storms and a more enjoyable sailing experience.
In today’s volatile markets, that stabilising influence is proving its worth yet again.
The policy process: Not for the fainthearted
It’s often said that watching legislation being made is akin to watching sausage being made; we may appreciate the end product, but the process itself isn’t for the faint of heart.
The messy reality of policy creation (its compromises, amendments, partisan manoeuvring, and special-interest influence) can be deeply unsettling to observe up close. Headlines that capture only fragments of this process often amplify market anxiety, as investors react to incomplete information about policies still taking shape.
Investors shouldn’t abandon sound strategy after glimpsing the unsavoury nature of policy development.
What matters most isn’t the chaotic journey of how tariffs or other economic policies come to be – it’s how your financial plan is positioned to adapt to the final outcome, whatever form it takes.
Markets are forward-looking
Remember that markets are inherently forward-looking.
Professional investors and institutions may continuously analyse potential policy changes and their economic implications, frantically incorporating these expectations into current asset prices… but by the time policies like tariffs are officially announced or implemented, much of their anticipated impact will have already been priced into markets.
When expected developments materialise, their actual effect on market performance may be significantly muted compared to predictions. The markets have already done much of the work in advance, adjusting to the probability-weighted outcomes of various scenarios.
The value of wisdom
In times of market turbulence and policy uncertainty, the value of experienced, level-headed financial guidance cannot be overstated. While information is readily available through countless digital channels, wisdom (the ability to apply knowledge meaningfully in specific contexts) remains irreplaceable.
Seasoned financial advisers who have navigated multiple market cycles, policy shifts, and economic environments bring a perspective that simply cannot be gleaned from headlines or market commentary.
The current market volatility calls for exactly this kind of steady, experienced guidance - the kind that helps investors distinguish between temporary disruptions and genuine reasons for strategic adjustments.
Warren Buffett famously said: “Be fearful when others are greedy, and greedy when others are fearful”.
Yet many investors find this wisdom easier to appreciate than to apply, at least without supportive counsel.
Face-to-face advice: A cornerstone of financial confidence
While technology has transformed many aspects of financial services, face-to-face advice is irreplaceable. The nuanced communication that happens in person - expressions, addressing unspoken concerns, and building genuine rapport - creates a foundation of trust that proves invaluable when markets test resolve.
Research consistently shows that investors who work with dedicated financial advisers not only adhere better to their long-term strategies during market turbulence but also experience less stress and anxiety about their financial futures.
This human element of financial guidance (reassurance, perspective, and personalised context) simply cannot be replicated through digital interfaces or automated services.
What can investors do?
Focus on what you can control.
Market fluctuations are inevitable, as are policy shifts with each new administration. Rather than getting caught up in day-to-day market movements or headline anxiety, successful investors focus on the factors within their control:
- Maintaining appropriate diversification across asset classes and regions
- Minimising investment costs and tax impacts
- Rebalancing portfolios systematically
- Staying disciplined during volatile periods
- Making decisions based on personal goals, rather than market predictions
Both academic research and historical market data consistently demonstrate that investment success is primarily determined by emotional discipline and strategic consistency… not by correctly predicting policy outcomes or market movements.
The long view matters most
Markets will rise and fall. Headlines will drive uncertainty. Politicians will implement policies, creating winners and losers in the short term.
Despite all of this, the historical trajectory of global markets has been upward. Investors who maintain perspective and discipline are consistently rewarded for their patience.
Rather than reacting to headlines about tariffs or other policy initiatives, focus on whether your investment approach remains aligned with your personal goals, time horizon, and risk tolerance.
When your financial decisions are guided by such a plan, you’re positioned to make objective decisions rather than emotional reactions. You can recognise opportunities where others see only threats and maintain confidence even when markets appear most unstable.
You never know what tomorrow brings – but with a well-balanced financial plan, you don’t need to worry about each day and its headlines.
