Should Investors Carry On?

We've had about 30 days of higher-than-average volatility in 2025...so, let's just throw in the towel and go to cash. Just kidding. However, that's what the mainstream media would tell you to do with your investment portfolio. Thank

goodness they aren't paid for that advice - or are they? This week's musings is inspired by the 1976 hit song, "Carry On Wayward Son" by the band Kansas. Here’s some trivia about the song:

• This song was the first major hit for the band Kansas and was a last minute addition to their album "Leftoverture." The song peaked at number 11 on the Billboard charts in 1977 and sold more than 5 million copies worldwide.

• The song was written by Kevin Livgren, guitarist in the band, just two days before they started recording "Leftoverture." He brought the song to the band and they all agreed it should go on the album.

• Livgren said he considered himself the "wayward son" and was striving to continue searching for something profound. He stated that he also wrote the song about the pressures he was facing when the band's career was on the line.

• This song has appeared in several movies, including Heroes (1977), Happy Gilmore (1996), and Anchorman - The Legend of Ron Burgundy (2004).

"Carry on, my wayward son

There'll be peace when you are done

Lay your weary head to rest

Don't you cry no more

Once I rose above the noise and confusion

Just to get a glimpse beyond this illusion

I was soaring ever higher

But I flew too high

Though my eyes could see, I still was a blind man

Though my mind could think, I still was a mad man

I hear the voices when I'm dreaming

I can hear them say"

Here's what we've seen so far this week..

Noise and Confusion. Investors who take a data-driven approach can learn to rise above the noise and confusion, as the song suggests.

First, there is still strife between China and the U.S. with regard to free trade. The beef goes back to Trump's first administration and patterns are beginning to repeat themselves. Financial media tried its darndest to create panic in 2018 when the first trade war between the U.S. and China occurred. Almost exactly at the bottom of the market, the media was using words like "havoc" and "chaos" to gain attention. The market rallied over the next 12 months. Media can't seem to help themselves this time around, either. Even China is using the same language now as it did back then. On Wednesday, China put out a statement regarding the current trade war with the U.S. that they will "fight til the end." In 2018, China used the same phrasing "fight until the end" just a few weeks before agreeing to a 90-day truce, which subsequently led to a trade deal. Will history repeat? Who knows, but it's likely something will get resolved.

Second, there is now strife between the White House and the Fed. President Trump has been critical of Fed Chairman Powell for not lowering the Fed Funds rate. This has been criticized by political opponents, who, just last year uttered similar words to chastise the Fed Chairman for not lowering interest rates. In reality, neither financial media nor politicians from either party should be relied upon by investors for financial advice. They each have their own agendas that typically have little to do with each investors' portfolio or objectives.

Finally, what we do know is that pullbacks in the S&P 500 typically lead to better results down the road. When equities go through a 15% or greater drawdown, returns are higher 12 months later 83% of the time. As more time passes, the odds eventually become 100% positive 10 years out or longer. In other words, turning off the media and the talking heads and listening to your financial advisor is a better approach to investing.

Blind or Mad? In order to invest with a data-driven method you have to look at the data. As the song would suggest, blind men need to see and mad men need to

think. The data would suggest that the consumer is strong. Retail Sales data for March showed that consumers spent 1.4% month-over-month, which is significantly stronger than February's data (+0.2%). The Atlanta Fed's GDPNow, still shows -0.1% projected for the 1st quarter, but both the NY Fed and St. Louis Fed continue to show +2%.

Volatility is easing as much of the de-leveraging from the Basis Trade seems to have washed through the system. The 10-year and 30-year swap rates have moved higher into a more normal range, which indicates the de-leveraging has stabilized. Treasury rates have also eased off last week's highs, which indicates some stability in the bond market. Lastly, the VIX volatility index closed below 30 on Thursday for the first time in over two weeks and the futures on the VIX suggests that investors are betting the level of the VIX will continue to drop. If this were to play out, it could mean the worst of the correction is over.

Lastly, the level of buying by insiders has risen during the recent volatility. It would appear that key executives and insiders are busy betting that equity markets are nearing lows and now is a good time to step in. The ratio of insider buys versus sells is the highest it has been since November of last year. As long as trade negotiations continue, there is likely to be some volatile trading. However, a sound investment strategy is better than guessing which way the political wind may blow on a given day.

Carry on you wayward investors...

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Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

Past Performance does not guarantee future results.