2025: Navigating the Noise
April 2025 will undoubtedly be remembered as a month where market volatility reached fever levels, testing the resolve of even the most experienced investors. The sheer velocity of market swings, driven by a mixture of geo-political pronouncements and shifting economic data, created an environment where knee-jerk reactions were common, but sound judgment was scarce.
Early April saw markets reeling from the US administration’s sweeping tariff announcements. The imposition of a 10% baseline tariff, coupled with significantly higher rates for specific nations, sent shockwaves through global equity and bond markets. Indices plunged, with the Dow Jones experiencing thousand-point drops and the S&P 500 suffering its worst weekly performance in years. This wasn’t just market jitters; it was a fundamental repricing of risk as investors grappled with the potential for a full-blown trade war and its global recessionary implications.
Yet, almost as quickly as the storm gathered, a partial calm was restored. Facing intense market pressure, particularly from a rapidly destabilising bond market where yields spiked alarmingly, the US administration announced a 90-day pause on tariffs for most nations (though notably excluding, and indeed increasing levies on, China). This policy pivot triggered a sharp relief rally, demonstrating the market’s sensitivity to trade policy shifts. However, this whiplash effect- down sharply, then up sharply – underscores a crucial point: attempting to time these politically-driven gyrations is very difficult, if not impossible.
Beneath the headline noise of tariffs and reversals, the economic data painted a picture demanding careful consideration. While March’s year-on-year inflation rate showed a slight moderation to 2.4%, underlying price pressures remain. More concerning are the revisions to growth forecasts.
Organisations like the IMF and the Conference Board significantly downgraded their US GDP growth projections for 2025, now anticipating growth closer to 1.6%-1.8%. Coupled with forecasts of decelerating job growth and a potential rise in the unemployment rate towards 4.5% in the coming year. The stagflationary narrative is becoming harder to ignore.
In such an environment, characterised by what some might call ‘chaos theory’ dynamics – where small inputs (like policy tweets) can have outsized, unpredictable market impacts – it pays to be rational. At Binary Capital, our approach remains anchored in principles that transcend short-term market noise: patience, long-term investing and high conviction. This is a credible ‘investible edge’
Market volatility, while uncomfortable, is not something to be feared but better understood. It often creates dislocations, separating fundamentally sound companies from those merely riding a wave of sentiment or cheap leverage. The indiscriminate selling seen in early April provided opportunities for disciplined investors to acquire at more reasonable valuations.
High conviction investing, focusing on a concentrated portfolio of investments that we understand deeply, allows us to maintain perspective when many others do not. We are not trying to predict the next policy announcement; we are focused on the long-term value creation potential of our holdings.
The relative outperformance of higher-yielding sectors like energy and utilities during the month also offered clues. In times of uncertainty, the market often seeks perceived safety and tangible cash flows, reinforcing the need for a balanced and core equity perspective.
At Binary Capital our portfolio range had a month of good relative returns and faced the volatility in the month with a strong diversified approach. Being patient investors being a crucial part of that relative return generation. Not panicking when perhaps others did so.
Looking ahead, uncertainty is likely to remain elevated. The tariff pause is temporary, underlying economic growth is slowing, and inflation remains sticky. However, for investors with a clear philosophy and the patience to execute it, volatility is not a crisis but a source of opportunity.
The key is to remain disciplined, focus on fundamentals, and resist the urge to react to every market movement. As we have consistently maintained, the real edge in investing isn’t found in frantic trading, but in diligent research, unwavering conviction, and the patience to let long-term value compound.
This is the Binary Advantage.
