Recovery or Recoil: Is the Downturn Over?

Last time, we discussed the market turbulence sparked by the Trump “Liberation Day” tariffs. At one point, the S&P 500 teetered on the edge of a bear market, narrowly avoiding a 20% drop from its highs.

Our philosophy then was simple: if you’re a long-term investor, stay the course on the plan we set together regardless of what’s going on in the markets. Long-term investing means thinking in decades—not weeks or months.

‍A Sharp Rebound

Fast forward to just a few weeks later. As of May 30, 2025, the S&P 500 has rebounded over 18.6% from its April 8th low. It’s now up 0.7% year-to-date and up more than 12.9% over the past 12 months.

So, what changed?

• Trump issued a 90-day pause on the tariffs to allow time for trade negotiations
• Some preliminary trade agreements have started to emerge
• Most significantly, a major trade deal with China was announced, easing tensions between the world’s two largest economies

‍The Good News

If you stayed the course and didn’t panic sell, you were almost instantly rewarded again…

for now… 

‍The (Potential) Bad News:

This rebound might reinforce a dangerous misconception for newer investors: that markets always recover quickly. They don’t.

In fact, my view is that we’re not yet out of the woods for this current “episode” of the markets: 

• The tariffs are paused, not repealed. The 90-day suspension expires July 9th, meaning renewed volatility may be just around the corner
• More importantly, the tariffs jolted our attention to a much deeper, more persistent threat: the US National Debt, which continues to grow with no credible plan for resolution
  
  • One prediction I am willing to make: there will be a painful reckoning associated with the debt at some point. One unfortunate economic reality is that you cannot financially engineer your way out of spending more than you make

So, What Should You Do?

I know I sound like a broken record, but the strategy remains the same: if you’re a long-term investor, you must prepare yourself for pain—not just short-term pullbacks, but potentially drawn-out periods of stagnation or decline.

That means:

• Holding enough cash and lower risk assets for your near-term needs
• And just as importantly, building the mental resilience not to panic the next time the market doesn’t bounce back right away

History has shown us long-lasting bear markets before, and it will happen again. But with discipline and perspective, long-term investors have historically had the best odds of winning.

Some of my favorite resources related to this article on the US National Debt:

• It’s Over: The FED Just Triggered A Dollar Reset - Graham Stephan
• US Debt Crisis Shakes The Stock Market - ClearValue Tax
• How the National Debt Could Bankrupt America - New Money

_{The linked resources are provided for informational purposes only. They were not prepared by or in collaboration with Fifr, the views and opinions expressed are their own and are not necessarily reflective of Fifr's. Fifr makes no warranty or guarantee as to the accuracy of information prepared by linked resources.}