Have you been watching the March Madness?  In about a week the NCAA basketball tournament is soon to draw to a close. Unfortunately, the markets have also experienced madness of late.  However, only time will tell when this short-term volatility comes to an end.  It seems investors have been extremely concerned over geopolitical issues causing oil to rally by over 50% in the last month, or so.  At the same time, the equity and bond markets, along with crypto and gold, simultaneously experienced negative returns. There have been few places to hide during the selloff.

The markets seem to be currently trading on geopolitical concerns rather than investment fundamentals such as corporate earnings, the outlook for corporate earnings, and the multiples on those earnings.  This makes for interesting times!

Eventually, markets follow corporate earnings and the outlook for corporate profits.  This is something to find comfort in.  Especially because the outlook for earnings has actually increased YTD, even while the market was declining.  In fact, the S&P is currently trading at a lower multiple than the five-year average ratio.  This is something we haven’t seen in a long time.

Furthermore, according to FactSet, the one-year bottom-up street consensus target for the S&P 500 stands at 8349, as of late last week.  The one-year target is some 28% higher than today’s close of 6529.  Please note that bottom-up numbers (a compilation of various analysts one-year targets of individual stocks in the S&P 500) are often higher than top-down targets often used by Wall Street strategists.  Regardless, if taken as an indication of direction, this is extremely bullish and points to upside over time.  For these reasons, we remain bullish for investors with a longer-term investment horizon.

If it were only that easy.  The market is not currently trading on fundamentals.  It is trading on the latest tweet, post, and soundbite.  For these reasons, things might be choppy for awhile until things return to more normalized levels.

Of course, there are significant potential threats to the outlook, especially with soaring energy prices.  Not only do higher energy prices impact the obvious  - such as the cost associated with filling up the gas tank, but higher energy prices also impact a wide variety of other areas including: transportation of goods, fertilizer prices and therefore food cost, ubiquitous plastics, and a whole host of other goods.  There is an old adage that “the best cure for higher prices is higher prices.”  In other words, there will be reduced demand if prices remain too high.   This raises many questions regarding inflation and even a potential recession.  This makes for a challenging environment for the Federal Reserve and reduces its ability to reduce interest rates at a time when employment appears to be less robust.  Although the equity markets will be closed Friday, all eyes will be watching the latest non-farm payroll numbers and unemployment stats when reported Friday.   

Short-term choppiness is likely to persist until ongoing geopolitical issues and concerns lessen.  Thankfully, fundamentals allow us to focus on the long-term.  Wishing you and your family a meaningful Easter and Passover filled with hope and joy.  And, may the only madness you experience be that of the basketball tournaments!

Not an Offer or Advice: This commentary is provided for informational and educational purposes only and does not constitute a recommendation to buy or sell any specific security or to adopt any particular investment strategy. The views expressed represent the current opinions of Joyce Wealth Management as of 3/31/26 and are subject to change without notice.