It’s a roller-coaster ride out there

The arrival of Donald Trump as President of the United States has brought more than investors perhaps bargained for. Touted as a business-friendly president who was good for markets, his first 90 or so days have shown him to be anything but market-friendly. Whether it is the bond, equity or even currency markets, 2025 has so far been characterised by havoc and significant volatility.

So far this year, the US market, as measured by the S&P500 Index, has fallen 9.4% in US dollar terms but 17.5% in euro terms, indicating also the extent to which the USD has fallen against the euro over the same period.

European markets have been more stable as money has flowed across the Atlantic into Europe. The Euro Stoxx 50 is up 1.4% year to date.

US technology stocks have been hit hardest. The growth outlook is clearly much more muddied with tariffs and reciprocal tariffs being implemented across the world. With the prospect of higher inflation stemming from these tariffs and lower growth, highly valued stocks such as technology shares moved to the front of the firing line.

This is creating an interesting dynamic. Throughout the recent past, there has been a growing army of retail investors that have ‘popularised’ direct investing in equities, with technological developments helping this. And with good reason, as markets have been strong and opportunities to earn good returns have been plentiful. 

Added to this, the local tax authorities have ruled that there are no capital gains taxes to be paid from gains on shares traded on regulated markets. Buying the dip has been a profitable strategy and we saw an attempt at this taking place again throughout the recent market turmoil.

This time, the market recovery was not completely sustained and further weakness is evident. Many retail investors have since ‘burnt’ their fingers. Does this change the outlook for such investors?

US technology stocks have been hit hardest

In many ways it may do but in the long term, it shouldn’t. Direct investing is here to stay and if one has the time and aptitude for it, it should be a part of one’s long-term wealth strategy. The tools available to retail investors are plentiful and low-cost.

The challenge here is to take out the emotion from the investment strategy, otherwise you are prone to panic selling, or digging your head in the sand and assuming that nothing fundamental has changed, when in fact it may have.

The other approach to investing would be to utilise a portfolio manager to undertake an investment strategy on your behalf. There are certainly benefits to doing this but also more costs.

For one, there is significantly less emotion in a portfolio manager’s approach and generally much more structure, which importantly should lead to greater resilience in a portfolio in tough times. After all, the first step to making money is not losing any.

In reality, the two approaches can and do sit side by side. They are not mutually exclusive. As an investor, it is key to have a long-term strategy and objective that sees you through both the good times and the bad. It is not just a case of investing when there is momentum in the market.  

There is an old adage, which in my opinion carries a lot of truth.  It says “time in the market is more important than timing the market”, and volatility like we’re seeing at the moment, while stomach-wrenching in some cases, can provide good entry opportunities for the investor to build on the long-term strategy. It is important, however, that you “jump in, strap up and be prepared for a ride”. Enjoy your Easter.

David Curmi is chief officer – business development & client relationships at Curmi and Partners Ltd.

The information presented in this commentary is solely provided for informational purposes and is not to be interpreted as investment advice, or to be used or considered as an offer or a solicitation to sell/buy or subscribe for any financial instruments, nor to constitute any advice or recommendation with respect to such financial instruments. Curmi and Partners Ltd is a member of the Malta Stock Exchange and is licensed by the MFSA to conduct investment services business.