Some of the impact of the Tax Cuts & Jobs Act will be felt later than January 1.
The market recently experienced its largest one-day decline since April, driven by escalating tensions between the U.S. and China over rare earth metals and tariff threats. While the brief selloff rattled some investors, markets quickly improved following softer language from the White House around trade. For long-term investors, these swings may feel like déjà vu after a period of relative market calm.
For long-term investors, a growing challenge today is how to manage cash as short-term interest rates fall. What appears safe actually comes with real costs beneath the surface, since holding too much cash can quietly undermine long-term financial goals. This comes at an important time, when some investors find themselves with “cash on the sidelines,” including a record $7.3 trillion held in money market funds.
The famous investing principle "don't fight the Fed" was coined in the 1970s but has only grown in significance. The idea is simple: the Federal Reserve's monetary policy decisions can have important effects on markets and the economy, so investors should consider them carefully. At the same time, perspective is needed to focus on the overall path of interest rates, and not individual Fed decisions. This is relevant today as the Fed continues its rate-cutting cycle amid a complex economic environment.
The late Jack Bogle observed that "successful investing is about owning businesses and reaping the huge rewards provided by the dividends and earnings growth of our nation's—and, for that matter, the world's—corporations." This wisdom is relevant today because the benefit of owning stocks is not just about capturing long-run price returns, but also in the dividends corporations pay to investors as they grow their profits.
