April Newsletter to Clients

Enjoy this month’s edition that features some tips for navigating an uncertain market, a review of first quarter investment returns, plus a reminder that Moneywatch Advisors is a fiduciary and what that means to you.

I first wrote this month’s newsletter at the beginning of April and focused on 1st quarter investment returns. But, with recent events that seems like ancient history now. Given that “uncertainty” is the term most often used in commentary about the stock and bond markets these days, I think a few quick reminders of how to deal with market volatility – and the anxiety it can cause - are in order:

•    The causes are varied but we see market declines all the time. As my last newsletter explained, there have been 38 market corrections in the more than 40 years of Moneywatch Advisors existence.  During that time we have learned to be patient and not overreact;
•    We don’t time the market by trying to sell before declines and to buy before upswings. Why? It’s impossible. As our dear, late colleague Bill Leffler used to say: “Who’s crystal ball should we use today?” 
•    According to J.P. Morgan, an investor with $10,000 in the S&P 500 Index who stayed fully invested between January 4, 1999 and December 31, 2018 would have gained $30,000. That time period includes the burst of the dot-com bubble that saw the tech heavy NASDAQ Index lose over 76% of its value in two years. An investor who sold out of the market, however, and missed 30 of the best days in the market would have less than when they started - $6,213;
•    Last Wednesday’s gain of 9.5% in the S&P 500 is a good example of that;
•    Time in the market, therefore, is more important than timing the market. We invest each of our client’s portfolios to match your unique timeline;
•    Perspective is important. Yes, the S&P 500 Index is down over 8% so far during 2025. But, from April, 2024 until now? The index is still up over 6%;
•    Finally, if a gyrating market makes you anxious, stopping looking. Rest assured we’re paying attention to your portfolios, your investments and your specific needs.

Our oldest son, Pierse, is a freshman at Henry Clay High School and is playing on the varsity lacrosse team. One of the many things young players need to learn is that the game is not won or lost in the first quarter. If the team gives up a few goals it may seem hopeless but, in reality, there’s still plenty of time to recover and win. Similarly, a big lead can evaporate if the team loses focus. Gaining experience through both scenarios helps these young players learn both can happen. 

Using high school lacrosse as an analogy, we as investors shouldn’t get too excited or too down because of first quarter stock and bond investment results. Not only is one quarter just a slice of this year but also just a small slice of the many investment years to come. With that perspective in mind, below are some of the results of the first quarter of 2025:

•    S&P 500 – declined 4.6%;
•    NASDAQ index of technology stocks - declined 10.2%;
•    Russell 2000 index of small, U.S. stocks – declined over 9%.

As Monty Python would say, “And now for something completely different.” We continually preach the virtues of diversifying our portfolios and this quarter shows the value of doing so. In contrast to the returns above, other areas of the bond and stock market performed well during Q1 as demonstrated by the following funds in our lineup that most clients own:

•    Dodge & Cox Income (DODIX) bond fund returned 1.78%;
•    Madison Dividend Income Fund (BHBFX), large cap value fund returned 3.09%;
•    Cohen & Steers Realty Shares (CSJIX) returned 3.41%;
•    T. Rowe Price Overseas Stock (TROIX) returned 6.46%. 

As we all know, past performance doesn’t guarantee future results.

What is a fiduciary?

We recently emailed you updates to the Moneywatch Advisors ADV, a form we file with the Securities and Exchange Commission, so I thought a reminder that Moneywatch is a fiduciary and an explanation of what that is could be helpful. 

In short, as a Registered Investment Advisor, we are held to a fiduciary standard of care. That means, by law, we must act solely in the best interests of our clients. Furthermore, Steve Byars, Robert Hammond and I are all Certified Financial Planners who must also agree to act as fiduciaries as part of our ongoing certification.
According to the National Association of Personal Financial Advisors (NAPFA), “non-fiduciary financial professionals can recommend investments with riskier features and lower returns because they earn more money for the advisor, even if those investments are not the best choice for their clients.” Moneywatch does not do that because our only source of revenue comes from fees from our clients – never kickbacks or incentives provided by third parties - so our allegiance is to you.

While our personal portfolios may be structured differently than some of  our clients because of differences in age or other personal situations, those of us at Moneywatch own the same investments you do. What’s good for you is good for us – and vice versa.

Thank you for your continuing confidence.