2025 has not been the soaring growth market investors had envisioned, but quite the opposite. Since 1/2/25, the DJIA has dropped from a (1) 42,905.09 high to a low of 41,010.24 (3/12/25), a loss of just under 1900 points. The S&P had the most significant one-day drop since 12/18/24 (2), wiping out a $4T market value from the recent peak.
The investment community has been on edge trying to weather the storm of global tariff uncertainty, tax bill/budget changes, Ukraine/Russia unrest, and inflation. These factors have created an increasingly rocky ride with no short-term end in sight. The market is recalibrating, and companies are at a stalemate in future spending as the assumptions they traditionally make for the future are too unpredictable for committing funds.
With that said, the equity market has investors anxious about their principal investments and how all these factors will affect their financial future. If you are a municipal bond buyer, there is more of a sense of calm. Most Muni bond buyers are in for the long haul and are quietly earning their reliable tax-free income while the principal of high-quality bonds is safe and will be returned to them on a specific date, providing a reassuring stability in these uncertain times.
If most bond buyers are not “playing the market,” then the daily fluctuations would not interfere with their tax-free income goals or their confidence in the security of their principal.
For investors who have not considered the 60/40 stock/bond portfolio balance, it may be time to re-access and consider adding bonds. Bonds typically offer downside protection when the equity market is rocky, and peace of mind that income is predictable, and the principal balance is secure. This predictability should instill a sense of security, even in the face of market volatility.
(1) Yahoo Finance (2) Reuters
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.
