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.

What a Noisy World Means for Your Portfolio

March 26, 2026
If it feels like the news cycle has been louder than usual lately, that's because it has been. Geopolitical tensions across multiple regions, shifting U.S. trade relationships, and a rapidly changing domestic political landscape are all contributing to elevated market volatility. We want to take a moment to share our perspectives on what this means for your portfolio and for the broader inflation picture. What's Happening Globally We are in an extraordinary moment. The U.S. is reshaping its economic and geopolitical relationships in ways that are accelerating global fragmentation and creating real uncertainty for businesses and investors alike. Energy markets have been particularly sensitive to these developments, with commodity prices responding sharply to supply disruptions and shipping route concerns. Most forecasters believe current disruptions are short-lived and expect prices to moderate as conditions stabilize, but the range of outcomes remains wide. Closer to home, affordability has become the defining political issue heading into the midterm cycle. The administration is rolling out consumer-focused measures around housing costs, prescription drugs, and credit, which could benefit some sectors while creating headwinds for others. What This Means for Inflation The inflation picture is nuanced right now. If current disruptions prove temporary, the impact on consumer prices should remain limited. However, if tensions persist and energy prices stay elevated, we expect to see some upward pressure on inflation over time. It is worth keeping in mind that energy prices, while attention-grabbing, are historically less influential on long-term inflation than factors like wage growth and domestic demand. The broader U.S. picture reflects a tension between tariff-driven price pressure on one side and softening economic momentum on the other. The Fed is navigating this carefully, balancing inflation concerns against labor market signals. For now, rates appear likely to hold steady near term, with modest cuts possible later in the year if conditions warrant. How We're Thinking About Your Portfolio Volatility is uncomfortable, but it is not the enemy of long-term wealth building. History has demonstrated consistently that market disruptions driven by geopolitical events tend to be temporary in nature. Long-term investors are best served by staying anchored to their goals and risk parameters rather than reacting to the news of the day. This environment does reinforce several principles we apply in managing your portfolio: maintaining thoughtful diversification, ensuring fixed income allocations reflect your actual income needs, and being intentional about where inflation and energy exposure sits within your overall strategy. We are monitoring developments closely and will continue to adjust positioning as the picture becomes clearer. As always, if anything here raises questions specific to your situation, please reach out. That conversation is exactly what we are here for.

What the New Tax Legislations Mean for Your Tax Plan in 2026

March 12, 2026
If you’ve been paying attention to the tax landscape this year, you already know the ground has shifted. New tax legislations signed into law last July made sweeping changes to the federal tax code—and for high-net-worth individuals and families, the implications are significant. Let’s cut through the noise and share what we think matters most. First, the seven-bracket individual rate structure from the 2017 Tax Cuts and Jobs Act is now permanent. That means the top marginal rate stays at 37 percent. For years, many of us were planning around the possibility that rates would snap back to 39.6 percent in 2026. That’s off the table. If you’d been accelerating income into prior years to avoid a potential rate increase, it’s time to reassess that strategy. Second, the standard deduction was made permanent at its elevated level. For most of our clients, this doesn’t change the calculus—you’re likely itemizing anyway—but it’s worth noting if you have family members in simpler tax situations. Third, and this is the big one for estate planning: the federal lifetime gift and estate tax exemption is now permanently set at $15 million per individual, indexed for inflation. No more sunset. For married couples, that’s $30 million you can transfer free of federal estate tax—and that number will only grow with inflation adjustments. If you’ve been hesitating on gifting strategies because of uncertainty around the exemption, that uncertainty is gone. There are also new wrinkles in the charitable deduction rules. Starting this year, itemized charitable deductions are only available for amounts exceeding 0.5 percent of your adjusted gross income, and the deduction is capped at 35 percent for taxpayers in the top bracket. That’s a meaningful change from the prior 60 percent AGI limit for cash gifts. If philanthropy is part of your wealth plan—and for many of our clients, it is—we need to rethink how and when you give. The SALT deduction cap has also been adjusted, rising to roughly $40,000 with phase-outs starting around $500,000 in modified AGI. For those of us in Texas, the lack of a state income tax softens this blow, but if you hold property in high-tax states, it’s still relevant. Here’s our takeaway after thirty years of doing this: certainty in the tax code is rare. When you get it, act on it. The permanent nature of these provisions gives us a genuine planning window. Let’s not waste it. If you haven’t reviewed your tax plan since last summer, let’s schedule a conversation.

Caught in the Middle: Sandwich Generation Financial Advice for Families Under Pressure

February 10, 2026
Caring for children and aging parents at the same time has become the reality for millions of families. The financial and emotional weight of this responsibility often arrives gradually — and then all at once. Those navigating this stage of life are known as the sandwich generation. What makes it uniquely challenging is not just the cost, but the constant pull on time, attention, and long-term planning. Effective sandwich generation financial advice must address all three pressures together: time, money, and estate considerations. The Hidden Cost: Time Caregiving demands time long before it demands money. Between medical appointments, school schedules, work responsibilities, and daily logistics, financial decisions are often pushed aside until they become urgent. This reactive approach increases stress and limits options. Proactive Elder Care planning helps families anticipate needs, organize responsibilities, and avoid crisis-driven decisions. With a clear structure in place, time becomes a tool rather than a constant source of pressure. Financial Pressure from Both Directions For many in the sandwich generation, every dollar is already spoken for. Supporting children through education and activities while helping parents with healthcare or living expenses can strain even well-managed finances. The challenge is maintaining momentum toward long-term goals while meeting immediate needs. A thoughtful Wealth Management strategy helps families: Prioritize cash flow intentionally Protect retirement savings Align short-term support with long-term security Preserve flexibility as circumstances evolve Without this coordination, it is easy to sacrifice future stability for today’s demands. Estate Planning Moves to the Forefront Caring for aging parents often forces conversations families have postponed for years. Questions around decision-making authority, asset coordination, beneficiary designations, and legacy planning become unavoidable. Addressing these matters early reduces uncertainty and helps protect family relationships during emotionally charged moments. Estate planning is not only about transferring assets — it is about clarity, dignity, and continuity across generations. A More Sustainable Way Forward The sandwich generation does not need perfection — it needs structure. With the right guidance, families can reduce stress, gain clarity, and create plans that reflect real life rather than idealized assumptions. Coordinating Elder Care and Wealth Management allows families to support loved ones without compromising their own future. At Affinity Capital, we help families navigate this complex season with perspective, intention, and care.