Weekly update - Tariffs, Trump, and Staying the Course: What Recent Market Volatility Really Tells Us

The first, and most time-tested, option is to stay invested in equities.  

History shows that panic-selling rarely works out. Interestingly, when market volatility spikes—as measured by the VIX (often referred to as Wall Street’s "fear gauge")—it has often signaled attractive entry points.  

Volatility, though unnerving, often precedes recovery as the graph below from Charlie Bonello at Creative Planning shows. 

Traditionally seen as a safe haven, fixed income - in particular US government bonds (US treasuries) hasn’t escaped turbulence either.  

In the past week alone, 10-year U.S. Treasury yields surged to 4.49%, marking the largest single-week jump since 2001.  

Two-year yields also rose, though less dramatically. For investors holding short-dated bonds or entering now, higher yields are a good thing.  

But for those holding longer-dated bonds, the rise in yields has driven down their market value—again, a reaction to rate and inflation expectations, not the quality of the underlying debt. 

This happens because as yields rise, newly issued bonds offer higher interest payments, making existing bonds with lower yields less attractive to buyers. As a result, the price of these older bonds in the secondary market drops to remain competitive.  

This inverse relationship between yields and bond prices is a fundamental principle of fixed income investing, and it's especially noticeable during periods of rapid interest rate changes. 

Still, it’s important not to panic. The U.S. government isn’t any more likely to default today than it was two weeks ago. But the secondary market reacts swiftly to any perceived changes in economic outlook, especially when policies like tariffs could reignite inflationary pressures. 

Often viewed as a safe-haven asset, gold prices soared to a record $3,328 per ounce on April 17th, posting a 3.7% increase—the largest weekly jump since April 2020.  

This surge has been driven in part by growing central bank demand, with analysts at Goldman Sachs even suggesting a potential rise to $3,700.  

China's policy shift allowing insurers to allocate up to 1% of assets to gold could add approximately 255 tonnes to annual demand, equivalent to about 25% of global central bank purchases.  So basic supply and demand economics would suggest that it will gain value this year. 

As we are likely to have more uncertain times ahead, this could be a good asset class, although from analysts estimates it seems to be trading at a high.  Whilst gold has been trading at a high, it is also one of our favourite investors least favourite assets! 

Warren Buffett, one of the most successful investors of all time, has long been vocal in his skepticism toward gold as an investment.  

He argues that gold is inherently unproductive—it doesn’t generate earnings, pay dividends, or contribute to economic growth.  

In one of his more famous analogies, Buffett noted that all the gold in the world could be shaped into a cube and would just sit there, offering no yield, no innovation, and no real utility beyond being admired.  

Instead, he prefers investments in productive assets like companies, farmland, or real estate—assets that generate cash flow and can compound wealth over time.  

Even when Berkshire Hathaway briefly invested in a gold mining company in 2020, it was likely driven by the company’s fundamentals, not gold itself.  

For long-term investors, Buffett’s perspective serves as a reminder to focus on assets that do more than just sit still—they should grow, produce, and contribute to your financial future. 

For those with exposure to gold, particularly in our moderate and adventurous funds, this has been a welcome cushion against equity volatility. 

Despite the U.S. market drawdown, other regions have shown resilience.  

Year-to-date, the FTSE 100 (UK) has been flat with a modest 1.26% gain, while the Euro Stoxx 50 (Europe) has risen 11.83%. This reinforces why holding a globally diversified portfolio is essential. 

During times where the US faces uncertianty, other regions can do very well.  This is why we do not hold just 100% of US stocks and we take a much broader global view within our portfolios. 

A lot of people are talking about the the "lost decade" and whether we could be entering this again.  It is important to note that it does not look like this at the moment but it is always worth understanding history! 

The “lost decade” refers to the period from 2000 to 2009, during which the S&P 500 delivered a negative total return, even when including dividends.  

After the dot-com bubble burst in 2000, 9/11 and the global financial crisis in 2008, many U.S. equity investors saw little to no growth over an entire decade.  

For those solely invested in U.S. large-cap stocks, it was a frustrating and stagnant period. However, investors with globally diversified portfolios experienced a very different outcome.  

International markets—particularly emerging markets and commodities—performed far better during this time, helping to smooth returns and provide meaningful growth.  

The lost decade stands as a powerful example of why diversification across geographies, asset classes, and sectors can protect investors from the risk of being overly concentrated in any single market.  

No one knows which region will lead in the years ahead, so spreading risk globally remains one of the most effective ways to build long-term resilience into a portfolio. 

U.S. equities remain a core holding, but global allocation adds valuable balance. Some investors have written off fixed income altogether, but shorter-dated instruments have held up well and continue to offer attractive yields. 

Three bear markets in five years isn’t normal.  

Hopefully, we don’t see that level of turbulence continue—but if we do, preparation matters more than prediction.  

Your portfolio should be built with both long-term growth and short-term needs in mind so that you do not have to panic sell! 

Holding short-dated bonds, money market funds, or cash reserves helps weather these storms without panic. It provides you a cushion of cash to be able to draw from in your portfolio.  This is why it is important to always review your holdings and ensure that they align with you lifestyle and your income needs! 

It also allows you to avoid the classic mistake of selling low. Market volatility is uncomfortable and it needs to be expected if you are investing! 

But for disciplined, diversified investors who understand their own risk tolerance, it's also an opportunity. 

Whether it’s tariffs, wars, or pandemics, uncertainty has always been part of the investing landscape. What matters is how we respond to it. 

If you are concerned about recent market movements or would like to discuss your investment approach, please get in touch with our client service team at client.services@hoxtonwealth.com. We’re here to help.