Good morning investors!
Despite the US economy shrinking in the first quarter, the S&P 500 closed up 2.92% for the week ending May 2, 2025.
For investors with a nuanced strategy of "buy-everything-all-the-time," life is feeling pretty good. After all, "stocks always go up," right?
Here are a few reasons why I wouldn't get too comfortable:
Of course, I'm always aware that I could be wrong, and that's why I ensure I make money whether the market is up or down by:
- Staying invested no matter how volatile the market is
- Continuing to contribute to investment accounts, ESPECIALLY tax-advantaged such as 401(k), IRA, HSA, and ESA
- Investing in rental properties that provide steady income every month
P.S. what do you think of the new look and feel for the newsletter? Let me know what you think! Now let's dive in:
In Today's Issue:
๐ฅ The Market Crash That Never Was
๐ฅ How to Invest $1,000+ Right Now
๐ฅ Warren Buffett is Retiring
Markets
The Market Crash That Never Was
For investors that follow the markets day to day (like yours truly), the stock market has been VERY volatile.
For investors that don't care about daily market movements (think Warren Buffett), April was a pretty boring month. After all, the S&P 500 only dropped 0.76% from the end of March through the end of April.
But during the month, stocks whipsawed from over 11% down for the month to near 10% up in a single day. How should we interpret this? There are 3 key takeaways:
- Markets are resilient. Whether it's a global financial crisis, a global pandemic, or double digit inflation, stocks tend to go up in the long-run. Through that lens, this resilience should not be a surprise.
- Stocks are still in a downtrend. While a 0.76% drop doesn't seem that big, we are still down 3.10% YTD and a much more respectable 7.45% down from the recent high on February 19.
- This is far from over. The 11% drop we saw in April was a preview of what could come if our global trade policy continues to escalate. And in my opinion, the market seems to not be properly pricing in the risks of the Trump administration continuing to double and triple down on their trade policy on an already fragile economy.
Investing
How to Invest $1,000+ Right Now
I get this question all the time:
Brian, I have a few thousand dollars ready to invest. What should I invest in?
The answer is a simple three step process that I detailed in this new blog post:
- Identify your investment horizon. Will you need this money soon, soon-ish, or not for a long while?
- Identify the appropriate investments for this horizon. If you need the money soon, you should probably keep that money safe and earning interest. If you can wait a long time, you should consider tax-advantaged accounts and more speculative assets like stocks.
- Invest your money and stick to the plan. Don't get sidetracked by "shiny object syndrome." Let others chase the crypto and memestocks while you continue to compound your wealth with your "boring" investment strategy.
People
Warren Buffett is Retiring
Berkshire Hathaway hosted its 60th Annual General Meeting, where thousands of shareholders and devoted Warren Buffett fans gather as the investing legend dispenses a lifetime of wisdom.
As the event was coming to a close, Warren Buffett stunned the investing world by announcing he would be handing the role of CEO to his second in command, Greg Abel.
While this transition was expected at some point, given Buffett is now 94 years old, no one was exatly sure when we would get the news.
Warren is widely recognized as the greatest investor of our generation, and while his accolades are innumerable, there is something I think is even more impressive about Buffett that I wish would get more attention.
The greatest investor of his generation still lives in the same cozy house he bought 60 years ago and drives a 2017 Cadillac. His wife's Ford Explorer looks to be around 15 years old.
And they are happy as clams.
See you next week!
-Brian
Responses