3 Things 4-7-25

 Thing One

One Analyst’s Take On The Recent market Turmoil

The following is an excerpt from a newsletter from David Alton Clark of Seeking Alpha:

"...Here are the four key positives I see in the current market situationThe Speculative Hype Has Eased

The froth that once dominated the market has largely been removed. This means we are moving away from overvalued, speculative investments that were driven more by market sentiment than fundamentals. With this correction, we're likely to see a more sustainable and realistic market environment, which can help foster long-term growth.Interest Rates Are Declining

Interest rates have been on a downward trend, which could open up opportunities in the housing market. Lower rates typically make mortgages more affordable, encouraging potential buyers and potentially unlocking a stagnant market. This could stimulate the economy, support real estate activity, and provide much-needed relief to homeowners who were facing high borrowing costs. A healthier housing market is often a sign of broader economic stability.Oil Prices Are Significantly Lower

A substantial drop in oil prices has a direct impact on fuel costs, meaning consumers should see lower gas prices at the pump. This reduction in energy costs not only benefits individual households but also has a ripple effect across the economy, lowering transportation and production costs. For many consumers, cheaper fuel is a welcome relief and helps to boost disposable income, which could support other sectors of the economy.Stock Market Recoveries are Inevitable

Although the current market downturn may feel unsettling, history shows us that stock markets tend to recover over time. Periods of sell-offs and market corrections are part of the natural market cycle, and they provide long-term investors with the opportunity to purchase high-quality stocks at a discount. While volatility can be uncomfortable in the short-term, the potential for future growth and capital appreciation remains strong, offering a favorable outlook for patient, long-term investors.I understand that market corrections can be tough to endure, but it’s important to remember that these fluctuations are a normal and necessary part of investing. Over the long haul, they create opportunities for those who are prepared to ride out the volatility... While I am exploring potential opportunities, I’m still taking a cautious approach and choosing to hold off on making any buy or sell decisions for the time being. Patience is key during uncertain times like this, and I believe it’s important to wait for the right moment to act.My primary recommendation for the week is to take some time to thoroughly review your portfolio. Evaluate each holding carefully and assess whether you have the conviction and confidence to continue holding them. If any positions no longer align with your long-term goals or risk tolerance, now might be a good time to make adjustments. This is a great opportunity to reflect on your strategy, sharpen your focus, and ensure your portfolio is well-positioned for the future…”

Though we would argue that the origin of this correction is quite unnatural, we otherwise agree with the sentiments expressed above.  As such, we will continue to focus on the long term and keep our eyes open for various opportunities this disruption has created.

Thing Two

A Reminder About How One Famous Investor Views Times Like These

Warren Buffett’s famous advice, “Be fearful when others are greedy and greedy when others are fearful,” reflects his contrarian investment philosophy, rooted in the idea that markets are driven by human emotion as much as by fundamentals. When others are greedy—chasing stocks during a euphoric bull run—prices often get inflated beyond their intrinsic value, setting the stage for a correction or crash. Buffett warns that joining the herd in these moments is risky because you’re likely overpaying for assets that could soon plummet. Conversely, when others are fearful—dumping stocks in a panic—prices can drop below their true worth, offering a rare chance to buy quality companies at a discount. This approach demands discipline and a long-term view, which Buffett has honed over decades at Berkshire Hathaway.

Take the 2008 financial crisis as an example. While panic gripped Wall Street and the S&P 500 shed nearly 40% of its value in a year, Buffett stayed calm, scooping up stakes in companies like Goldman Sachs and General Electric at bargain prices. Others were fearful, selling off amid uncertainty, but Buffett saw opportunity in solid businesses temporarily battered by market sentiment. His $5 billion investment in Goldman preferred stock, with its 10% dividend and warrants, paid off handsomely as the market recovered. This move wasn’t about timing the bottom perfectly—it was about recognizing that fear had oversold the market, creating value for those bold enough to act. By contrast, during the dot-com bubble of the late 1990s, when greed drove tech stocks to absurd heights, Buffett sat out, avoiding the inevitable bust that wiped out trillions in paper wealth.

Now let's fast forward. The S&P 500 closed at 5,396 on March 21, 2025.   By April 4, 2025, it had fallen to 5,074, a drop of 322 points or 6%. Over these two weeks, this decline—accelerated by a reported 10.5% drop in the last two days alone—reflects mounting fear tied to Trump’s tariff escalations. Buffett’s advice here would be to sift through the wreckage for undervalued stocks, not panic-sell. His maxim is by no means a crystal ball—it’s a mindset. It’s about resisting the emotional pull of the crowd and focusing on what an asset is really worth, not what the market says it’s worth today.

The lesson? Greed inflates bubbles; fear pops them. Success lies in knowing which is which and acting accordingly. 

Thing Three

Just A Thought 

"The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt."— Bertrand Russell