Hello, and welcome to the IVA Weekly Brief for Wednesday, April 2.
There are no changes recommended for any of our Portfolios.
This afternoon, President Trump is expected to unveil a sweeping new tariff plan. Building on last week’s announcement of a 25% tariff on auto imports, the administration plans to impose “reciprocal” tariffs on trading partners worldwide.
Ask (nearly) any economist, and they’ll tell you sweeping tariffs aren’t exactly “good”—to use the technical term. As David Kelly, JP Morgan’s chief global strategist, put it, tariffs “raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions. Other than that, they’re fine.”
Of course, we still don’t know exactly what President Trump will announce this afternoon. In fact, as I write this, Bloomberg’s headline reads: “Trump Tariff Plans Still in Limbo.” And given how tariffs have been announced and rolled back throughout the year, there’s no guarantee anything unveiled today will stick for long.
I won’t add to the speculation; we’ll know more soon enough.
Even if you accept the argument that tariffs will eventually boost domestic manufacturing and government revenue, the road from here to there is likely to be bumpy. Even the administration has acknowledged as much.
So, what should an investor do if we’re in for a period of economic transition? Diversify, diversify, diversify.
If anyone claims to know precisely how tariffs will play out, they’re fooling you—and probably themselves. What we do know is that diversification has delivered. Commodities, foreign stocks, bonds, real estate and cash were positive even as U.S. stocks, measured by Total Stock Market Index (VTSAX), fell 4.8% in the first quarter.
Calling market turning points in real time is never easy, but it feels like we’re entering a new economic and market regime. That shift often brings a change in leadership—and that’s exactly what we’re seeing. The “Magnificent Seven” tech mega-caps, last cycle’s standout performers, have stumbled: The Roundhill Magnificent Seven ETF (MAGS) dropped 15.7% in the first quarter.
Staying diversified ensures you’re positioned to participate in whatever leadership emerges next.
Our Portfolios
Speaking of diversification, our Portfolios are showing relatively good returns for the year through Tuesday. The Aggressive Portfolio is down 1.6%, the Aggressive ETF Portfolio is down 2.1%, the Growth Portfolio is down 1.0%, the Moderate Portfolio is up 0.2% and the Conservative Portfolio is up 1.8%.
This compares to a 4.5% decline for Total Stock Market Index (VTSAX), a 5.8% gain for Total International Stock Index (VTIAX), and a 3.1% return for Total Bond Market Index (VBTLX). Vanguard’s most aggressive multi-index fund, Target Retirement 2070 (VSNVX), is down 0.2% for the year, and its most conservative, LifeStrategy Income (VASIX), is up 1.7%.
IVA Research
Yesterday, I took a deeper dive into the Portfolios in the quarterly recap article I shared with Premium Members.
I also shared an article explaining how opening (or adding to) a Roth IRA can jumpstart a young person's retirement.
Until my next IVA Weekly Brief, have a safe, sound and prosperous investment future.
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