Market Flash April 4, 2025

April 4, 2025

We woke up this morning to another market sell-off. Our main point this morning is for you to not equate your portfolios to the major market indices . We believe   our portfolios are well positioned for this sell-off and we see great opportunities for long-term investors.  There are a lot of numbers within this Market Flash , but we trust that they are presented well. Prior to yesterday, we averaged 25% to 30% in cash, much of it due to sales of technology heavy funds throughout the first quarter. We took advantage of yesterday's sell-off to reposition our portfolios.

 

As we write this morning, our Affinity Capital Income & Appreciation & Capital Appreciation Portfolios are averaging (-1.37%) versus (-4.16%) for the S&P 500 for the morning. An advantage of 2.79% or a 67% ratio to the Index. Mentioned below: While we would like to see some support in the markets around these levels, we could be at the bottom of this sell-off or the top of the next leg and experience tells us that gravity is quite a weighty force!

 

Portfolio Notes:

  • We remain on average 20% in Cash

  • We are out of Small and Mid Cap positions (See Russell 2000 Index performance below)

  • We average 30% to 40% in Fixed Income (Bonds)

  • We added partial positions of high-quality individual stocks to our portfolio. 4 of 5 were positive for the day yesterday.

 

Your portfolios are well positioned for this sell-off and we see great opportunities for long-term investors. As we speak with friends in the investment community as well as others with accounts elsewhere, the consensus is to "just ride it out". The math is simple, over time, it is much more difficult to recover from losses than participate fully in a bull market. We will be working hard to position your hard-earned assets for long-term common-sense income and growth.

 

As noted in our Affinity Capital Market Flash on Tuesday with a quote from our Comment on March 10th:

 

Throughout the first quarter we have been selling mostly technology-related positions and building up cash in our client accounts, averaging 25% - 30%. As noted in our previous  Affinity Capital Market Flash  of March 10th    Market Flash | Affinity Capital , our view on the major market indices was as follows:

  • The tech-heavy Nasdaq will likely see another 5% to 9% downside.

  • The Dow Jones Industrial Average has reached a support level. While we would like to see it hold here, the next drop could be another 4.5% to 5 %. For perspective that would be in the area of another 2000 points to the downside – which sounds a bit scarier than 5%

  • The S&P 500 may see another 5% to the downside.

 

Yesterday saw the major averages sell-off significantly:

  • The S&P 500 fell 274.45 points, or 4.8%, to 5,396.52.

  • The Dow Jones Industrial Average fell 1,679.39 points, or 4%, to 40,545.93.

  • The Nasdaq composite fell 1,050.44 points, or 6%, to 16,550.61.

  • The Russell 2000 index of smaller companies fell 134.82 points, or 6.6%, to 1,910.55.

 

As we write this morning; the major averages are again selling off. While we would like to see some support in the markets around these levels we could be at the bottom of this sell-off or the top of the next leg.

  • The S&P 500 is off -224.35 (-4.16%)  

    • This is a current support level

    • We see the next support level at another (-4.88%) to -(6.78%) to the downside

  • The Dow Jones Industrial Average is off -1,417.52 (-3.50%)  

    • Current support level is another (- 2.44%)

    • We see the next support level at another (-3.80%) to the downside

  • The Nasdaq composite is off -764.00 (-4.62%)  

    • Current support level is between this current level and another (- 2.44%) to the downside

    • We see the next support level at another (-5.62%) to the downside

  • ** Please note that these are not crystal ball predictions, they are simply target areas or mile-markers  used as just one piece of information to evaluate the markets.

 

To note a well-known quote among investors, "Be greedy when others are fearful and fearful when others are greedy."

 

Monday will tell us a lot about the markets going forward. We anticipate some clarity as we move to mid-year and into the 3rd quarter. As we have stated many times before, the markets are most fearful of the unknown. The optimistic view is that the tariffs are mostly negotiating tools and that as trading partners come to the table, a large number of agreements can be reached. Additionally, we believe the current tax bill in congress will be favorable to the markets. These are just two of many issues that face the markets, and we continue to be vigilant in monitoring those that affect your investments.

 

As always, please reach out with any questions or concerns. We welcome an opportunity to visit with you and appreciate the faith and confidence you have in Affinity Capital and our team.

Patience Over Panic: Interpreting Today’s Fed Decision

January 28, 2026
The Federal Reserve concluded its meeting today by leaving interest rates unchanged, maintaining the current policy range as it continues to assess the evolving economic landscape. This decision reflects a deliberate pause after recent policy adjustments and underscores the Fed’s ongoing effort to balance progress on inflation with signs of moderation in economic growth. In its statement, the Federal Open Market Committee acknowledged that inflation has continued to ease from prior peaks, though it remains above the Fed’s longer-term objective. At the same time, economic activity has shown resilience. Consumer spending has held up, business investment remains uneven but stable, and labor market conditions, while cooling from earlier strength, continue to reflect solid underlying demand for workers. Wage growth has moderated, but employment levels remain elevated relative to historical norms. The Fed’s decision to hold rates steady signals a desire for greater clarity before making additional policy moves. Policymakers have emphasized that future decisions will be driven by incoming data rather than a predetermined path. This approach reflects the complexity of the current environment, where encouraging inflation trends coexist with pockets of economic strength that could slow further progress if policy is eased too quickly. For the broader economy, a steady policy stance provides near-term predictability. Borrowing costs remain elevated compared to the prior decade, but the absence of additional tightening reduces the risk of an abrupt slowdown. Households and businesses continue to adapt to higher rates, and the Fed appears focused on avoiding unnecessary pressure that could undermine growth while inflation is already moving in the right direction. From a market perspective, today’s decision reinforces a theme investors have been grappling with for months: patience. Markets have spent much of the past year adjusting expectations around the timing and pace of potential rate cuts. The Fed’s message suggests that while easing may occur in the future, it is unlikely to happen rapidly or without clear evidence that inflation is sustainably under control. As a result, market movements are likely to remain sensitive to economic data, particularly inflation reports, employment figures, and indicators of consumer demand. Importantly, the Fed also reaffirmed its commitment to maintaining restrictive policy until it is confident that price stability has been restored. This reinforces the idea that the central bank is prioritizing long-term economic health over short-term market comfort. While this stance can introduce periods of volatility, it also supports the foundation for more durable growth over time. Looking ahead, the economic outlook remains constructive but uneven. Growth is expected to continue at a more moderate pace, with cooling inflation and stable employment supporting consumer activity. At the same time, higher financing costs and tighter credit conditions may weigh on certain sectors, particularly those that benefited from ultra-low rates in prior years. This divergence underscores the importance of diversification and discipline within investment strategies. At Affinity Capital, we view today’s decision as consistent with a broader transition toward a more normalized economic environment. The era of emergency-level policy is firmly behind us, and the path forward is likely to involve incremental adjustments rather than dramatic shifts. Periods like this often reward investors who remain focused on long-term objectives, risk management, and thoughtful portfolio construction rather than short-term headlines. As always, we will continue to monitor economic developments closely and assess how changes in monetary policy may impact portfolios and financial plans. While uncertainty remains a constant in markets, a measured and intentional approach continues to be the most reliable way to navigate it.

Markets, Geopolitics, and Recent Volatility

January 21, 2026
Recent market headlines have been driven less by economic data and more by geopolitics. In particular, renewed discussion around Greenland and its strategic importance has introduced a new layer of uncertainty into global markets. Greenland matters not because of its size or population, but because of its location and resources. It sits at a critical crossroads between North America and Europe, plays an increasingly important role in Arctic shipping routes, and holds significant reserves of rare earth minerals that are essential for technology, defense systems, and energy infrastructure. As global competition for these resources intensifies, Greenland has become a focal point in broader strategic and trade discussions. Markets reacted quickly to this uncertainty. U.S. stock indexes moved lower in a broad selloff, with technology shares leading the decline. At the same time, investors shifted toward more defensive assets, pushing volatility higher, lifting gold prices, and pressuring risk-oriented assets such as cryptocurrencies. Similar caution was reflected in overseas markets as well. When geopolitical issues intersect with trade policy, markets tend to respond swiftly. Even the possibility of changes in tariffs, trade relationships, or diplomatic alignment can influence assumptions about global supply chains, corporate earnings, and economic growth. That is what markets have been digesting. These developments are now a regular part of the global environment. Markets today must absorb not only interest rates and earnings reports, but also geopolitical strategy, resource security, and shifting alliances. This can create short-term market adjustments as investors reassess expectations. Geopolitical uncertainty does not automatically translate into lasting economic damage. Markets have navigated trade disputes, diplomatic standoffs, and strategic realignments many times before. Over time, clarity emerges, negotiations evolve, and economic activity adapts. We continue to watch these developments closely and view them as part of the broader global backdrop in which markets operate. While the headlines may feel new, the underlying dynamic of markets responding to geopolitical uncertainty is familiar and expected. If you have questions about how global events fit into the bigger picture, we are always available to talk them through. Understanding the context behind the headlines is often the most effective way to stay grounded when markets react to evolving global issues.

The Policy Pivot: Key Takeaways for Investors

December 11, 2025
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