The Futility Of Market Timing
After a strong 2025, both bonds and stocks gave back some of their gains late in the first quarter of 2026. The rapid increase in oil and gas prices from the start of the Iranian conflict on February 28, 2026, the resulting fears of higher inflation, and expectations that the Federal Reserve would pause lowering rates led to higher yields and lower bond prices.
Prices declined and volatility increased for global stocks as well. Even in 2025, the ride for global stocks was not as smooth as their double-digit returns would suggest.
Spring 2025 saw the S&P 500 (U.S. Large-cap stocks) fall nearly 19%, mainly due to a poor reaction to President Trump’s April announcement of tariff increases. (The index finished the year up almost 18% in total return.)
Staying Disciplined Through Uncertainty
These spikes in volatility over the past year and the recent double whammy of declines in bonds and stocks have spurred some diversified investors to consider going to cash until they see things improve. Brown Financial has consistently cautioned clients against market timing. The two graphs below from Hartford Funds illustrate that market timing is impossible in practice, both in the short term and long term. Missing even a few days can be costly for a portfolio. In fact, the S&P 500’s best single day of 2025 happened on April 9, right in the middle of the spring 2025 volatility!
Your Brown Financial investment committee is constantly monitoring market conditions and will adjust portfolio model allocations as necessary.
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