May 2025 | Tariffs, Patience, and Long-Run Returns

Last month I cited low consumer sentiment readings and their (historically speaking) indication of future positive returns. As of Tuesday (May 6, 2025), the S&P 500 was on its longest win streak since 2004. 

Why am I sharing this? To communicate a small, but very recent, example of the payoff for exercising patience and long-term orientation during times of economic uncertainty.

Market Update

Though the market has rebounded from its intraday trough of 4,835 on April 7th, there is still much uncertainty amid tariffs. The Fed has decided to hold interest rates steady while they wait to see how policy unfolds. One thing seems obvious – an increase in tariffs will most likely not fare well for the economy. 

That said, we are long-term investors. I’d be remiss not to share from two individuals much more adept at explaining this situation.

This first quote is from Jeremy Siegel’s (Senior Economist to WisdomTree and Emeritus Professor of Finance at The Wharton School of the University of Pennsylvania) weekly commentary from 04/15/2025:

“A reminder for the long-term orientation. Even if tariffs stay on for three more years, their net present impact on long-term earnings is relatively small. A 20x PE implies that only 10% of a stock’s value comes from earnings over the next two years. Short-term damage—even significant—does not erase long-run returns.”  

We’re always here to answer your questions or address your concerns. It is a privilege to serve you.  

On behalf of your PWA team,

Brock Hedgecoke, CFP® 
Financial Advisor