Best of the 207 Awards! RSWA is honored to receive the highest recognition, earning Gold Medals for Wealth Management and Financial Planning in the Best of 207 awards! These awards celebrate Maine’s top businesses and services, as voted by the public. Winning for the third consecutive year is a privilege, and we are truly humbled by this recognition. We are deeply grateful for the trust our clients and professional partners place in us, allowing us to do the work we love. Our commitment to excellence and continuous improvement remains steadfast. Thank you to everyone who voted for us—we sincerely appreciate your support! Best of the 207
And on to the weekly newsletter:
Higher Market Volatility Ahead? As President Trump’s second term reaches its one-month mark, the headlines have been relentless. The new administration is wasting no time in pursuing campaign promises, including tariffs and reducing government spending and waste. These policies have sparked intense debate, leaving many uncertain about what will ultimately be implemented and what the broader impact will be. With the whirlwind of news and unpredictability surrounding each decision, many anticipate heightened market volatility as an inevitable outcome. But will that actually be the case?
Fortunately, we have four years of recent data to look at:
Market volatility, or the degree of price fluctuations, is commonly measured by the CBOE Volatility Index (VIX). The VIX analyzes activity in the S&P 500 futures market to estimate expected volatility over the next 30 days. Generally, a VIX level of 20 or below indicates a more stable market with lower volatility, while a reading of 30 or higher often signals heightened uncertainty, risk, and fear.
In the chart above, I’ve highlighted these key levels to illustrate how the VIX has performed since January 2017, the start of President Trump’s first term. Unsurprisingly, the VIX reached its highest and most sustained levels in 2020. However, what may be more unexpected is how relatively low market volatility was from 2017 to 2019, aside from a few short-lived spikes in volatility. Since the VIX was introduced in 1990, 81 of its 100 lowest readings occurred during President Trump’s first term, with the majority recorded in 2017, his first year in office. VIX – Historical Data
Market volatility can also be measured by how long it stays below its previous all-time high and the depth of its declines. The chart above illustrates how far the market was from its all-time high at any given point since January 2017. A market drop of 10% or more is typically considered a meaningful “correction.”
Between January 1, 2017 and December 31, 2020, the S&P 500 was more than 10% off its highs on just 135 days, with 96 of those occurring in early 2020 during the onset of the pandemic. In contrast, while the peak decline wasn’t as steep, the market remained below that threshold for 456 days in 2022 and 2023 alone.
The Takeaway:
With so much uncertainty around upcoming policy decisions and their economic impact, how does the market seem to shrug it off? The answer lies in its focus on the underlying health of the U.S. economy and the businesses and consumers that drive it. Every volatility spike or market downturn shown in the charts aligns with fundamental economic concerns—recession fears in 2018, the global pandemic in 2020, and inflation and recession worries in 2022—not tweets, headlines, or political rhetoric. If legitimate economic concerns arise, a market pullback is likely. But as long as confidence in the economy remains strong, the market tends to filter out the noise.
Investing based on political views or daily news cycles has never been, and likely never will be, a sound strategy. Instead, staying invested for the long term and navigating market cycles—rather than trying to time them—has consistently proven to be the better approach.
Financial Planning Corner:
True Up Your 2024 Retirement Contributions
Although we're nearly two months into 2025, there's still time for your 2024 self to help your future self! Until the tax filing deadline on April 15, 2025, individuals can contribute to their IRAs and Health Savings Accounts for the 2024 tax year. This is a great opportunity to review your eligibility and maximize your savings. Each account type has specific contribution and income limits, so consult your tax preparer or financial advisor to ensure you're making the most of these benefits.
Here is a summary of contribution and income thresholds for the 2024 tax year:
Self-employed individuals and small business owners should take the time to review and maximize their contributions to retirement plans such as SEP IRAs, Solo 401(k)s, and pension plans.
Quick Hits:
- Dreaming of warmer weather – when to book your flights for summer travel – Travel + Leisure
- The case for seeing a physical therapist before you get hurt – AP News
- 3 ultra-processed foods to avoid on your next grocery trip – CNBC
- Sweden wants you to come hibernate for the winter. It actually sounds quite enjoyable - BBC
RSWA’s Next Client Event – Jimmy’s Jazz Club in Portsmouth on March 28th! Invites and additional details will be going out soon. In the meantime, hold time in your calendar on the evening of March 28th to join us for a nice evening at Jimmy’s Jazz Club in Portsmouth. Sam Greenfield will be playing that night with his band and will be playing a mix of jazz, pop, and funk. We hope to see you there!
Quote: “What good is the warmth of summer, without the cold of winter to give it sweetness.” - John Steinbeck
Thank you for reading RSWA Financial Advisor Insights! We welcome feedback, and please forward this to a friend! Be well, take care, and stay safe!
