The U in FUD...Uncertainty.

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The last time we heard one word on Wall Street repeated as much as "uncertainty" has been recently was during the Covid-19 Pandemic. Then, the word was "unprecedented". The word “uncertainty” came up 47 times in last week's Federal Reserve’s latest Beige Book, which gathers evidence on economic conditions around the country. That count was about three times as often as it was mentioned in January. Fair. A lot of significant factors important to investors, consumers and business leaders globally are uncertain. Uncertainty relating to corporate earnings and revenue growth and margin expansion, to the health of the economy with recession fears mounting, and to the impact of tariffs have had a sudden, sharp affect on consumer and investor sentiment. In what has been a short amount of time, consensus expectations for a positive U.S. economy and stock market have flipped to an increasingly high degree of FUD - Fear Uncertainty & Doubt. The outlook has turned cloudy. Daily tariff threats, and today's talk of a potential government shutdown are not helping to bring clarity. As there are more bricks piling up to make a higher "wall of worry", market sentiment shows how it is weighing on investors comfort.

Much of what has happened so far this year that has sparked the spike in uncertainty and hit sentiment, I noted in my 2025 Outlook. Revisiting that shows I predicted, "What 2025 will bring with certainty is uncertainty." I called 2025 "The year of the Question Mark (?)". My outlook suggested investors keep proper perspective when managing market expectations for 2025, with the uncertainty of politics, policies, tariffs and taxes in mind. "I expect to see significant shifts and increased market volatility as potential policies from the incoming Trump administration combine with uncertainty about inflation and global economic strength," was noted in my 2025 Outlook.

Here's a quote from Warren Buffett on uncertainty: "The future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values." As an investor managing Berkshire Hathaway, Mr. Buffett currently is holding a high amount of cash. His cash stockpile of about $335 billion now is a record-high amount, nearly double the amount he held at the end of 2023. That is an effective call in the defensive play book.

John J. Gardner, CFP®, CPM®
Blackhawk Wealth Advisors
3860 Blackhawk Rd, Ste. 160
Danville, Ca. 94506
888.985.PLAN (7526)

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