Wright Cove Capital: April 2025

For over 25 years, we’ve been on the front lines of the markets. We were in NYC on 9/11, managed risk through the Great Financial Crisis, and adapted to the challenges of Covid-19.

The volatility and market reactions following the Liberation Day tariff announcements feel both familiar and unprecedented. With real-time rule changes and large intraday swings becoming common, this is not typical market behavior.

While uncertainty usually leads to volatility and eventual stabilization, the constant shifts in policy prevent effective business and consumer planning. When social media posts can trigger 7% global market swings in minutes, market efficiency breaks down, often leading to systemic issues.

We’re now seeing the next phase: corporations like Delta and Walmart are withdrawing future forecasts (other companies will follow). This uncertainty will persist until clarity emerges.

As one financial network noted, understanding the “seatback instructions” on an airplane is crucial before turbulence hits. We proactively monitor positions, markets, and client cash needs, constantly focusing on liquidity, duration, and Fed policy – the fundamentals that matter most in times of turmoil.

The market might rebound quickly, or this could be a longer period of adjustment. Our focus remains on what we can control.

For long-term investors, 10-15% market drops are not uncommon and often create opportunities. Market timing, including trying to predict policy shifts or market bottoms, however, isn’t a reliable strategy.

For balanced portfolios, diversification is crucial. We remain positioned with minimal long-duration bonds and credit risk, favoring cash and T-bills. We’ve used volatility to harvest tax losses and will continue to rebalance strategically.

And for those who have a lower risk-tolerance, money market and short-duration bonds have done their job and weathered the storm as intended.

We have had some very productive, and reassuring conversations with clients the last few days and will continue to reach out over the duration of these events.

Please do not hesitate to reach with any questions or concerns.

Regards,

Eric and Cass

Eric Leinwand, Principal – Eric@wrightcovecapital.com

Cass Tokarski, Principal – Cass@wrightcovecapital.com

The themes and strategies that we speak about and the positioning we take in portfolios are all customizable to best reflect each of our clients’ own unique goals and should not be interpreted as general investment advice.