Market Update – September 14th, 2025
2 weeks ago, John Nagle published a great piece addressing concerns with investing in a stock market trading @ all-time highs.
As presented, evidence doesn’t justify serious consternation and history actually indicates entering markets at prior peaks portends positivity! (1, 3 & 5 years into the future).1
Ahead of an important week for markets and the economy – the Fed meets on Wednesday with high expectations for the first rate cut of the year – I wanted weigh in with a corroborative theory we’ve been developing. In essence, we feel that investors are not giving the market credit for time-served!
The sentencing imagery is intended to characterize periods of offensive market behavior…precipitous pull-backs…those of the bear market (-20%) variety, which tend to happen approximately every 5 years going back to 1945.2
Interestingly, despite the market setting new records this week, the pull-back pace is running well ahead of expectations. Just looking back to 2020, we have experienced 3 qualifying bear-market moves in less than 5 years! The intermittent dislocation has become so common, it’s as though investors are acting like it hasn’t happened! For those of you old enough to remember, the classic ‘80s film, the Blue’s Brothers, it is reminiscent of Jake asking Elwood how frequently the Chicago L-Train would pass behind their apartment, shaking the light fixtures and furniture. “So often,” Elwood responded, “you don’t even notice.”
Every dramatic draw-down has unique markings: COVID, Furious Fed Hiking, and Tariff Tantrums chronologically characterized the tri-fecta for the 2020’s. And as each has advanced into the archives, the attendant drama is recalled less dastardly. Adding salve to this passage of time is the speed with which each recuperation occurred.
“Parabolic,” “Snap-Back,” “Rapid Recovery,” you can pick your personification of the recent rebounds. They all qualify. And shouldn’t that be the expectation? I mean, why wouldn’t the market recover quickly? And, importantly, is a grueling, elongated bear market necessary for investors to experience and benefit from its catharsis?
We live in a time where the immediate incorporation of available information transpires, literally, instantaneously. The omnipresence of machine learning, large language modeling and quantum computing (the backbones of A.I.!) conspire to readily reflect data and its probabilistic impact in ALL situations: across countries, industries and economies. So why would we expect markets, (they themselves effectively operating as A.I. modals in their real-time reflection of the collective intelligence and emotions of their participants 6.5 hours/day), to respond slowly to anything? Because they did in the past?
We think that this is the “new normal” in the expectation of volatility within financial markets. We think that strengthening our investor resolve for the accelerated intensity of price dislocation is appropriate. We think that if market-timing was challenging before the age of A.I. (hint: it was!) then it really doesn’t stand a chance in the future. And we think that the benefits of asset allocation, rules-based rebalancing and a total return (income plus appreciation) approach to investing is entering a golden age.
Bear markets have historically lasted about a third the length of bull markets and we expect that ratio to continue.3 And if the last 5 years are a gauge, we presume a compression of the cycle will perpetuate. With that being the case, we will embrace discipline to put client portfolios in the path of opportunities emerging from the unavoidable influence of technology on financial markets. Much to the dismay of many, things are only getting started in the digital revolution and we are committed to be progressive in its incorporation.
Have a great week and we’ll check in after the Fed meeting!
Footnotes:
- JPMorgan Guide to the Markets https://am.jpmorgan.com/us/en/asset-management/protected/adv/insights/market-insights/guide-to-the-markets/
- Hartford Funds https://www.hartfordfunds.com/dam/en/docs/pub/whitepapers/CCWP045.pdf
- Hartford Funds https://www.hartfordfunds.com/dam/en/docs/pub/whitepapers/CCWP045.pdf
The views expressed herein are those of Doug Ciocca as of September 14th, 2025 and are subject to change at any time based on market or other conditions, as are statements of financial market trends, which are based on current market conditions. This market commentary is a publication of Kavar Capital Partners (KCP) and is provided as a service to clients and friends of KCP solely for their own use and information. The information provided is for general informational purposes only and should not be considered an individualized recommendation of any particular security, strategy or investment product, and should not be construed as investment, legal or tax advice. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s investment portfolio. All investment strategies have the potential for profit or loss and past performance does not ensure future results. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The charts and graphs presented do not represent the performance of KCP or any of its advisory clients. Historical performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance results. There can be no assurances that a client’s portfolio will match or outperform any particular benchmark. KCP makes no warranties with regard to the information or results obtained by its use and disclaims any liability arising out of your use of, or reliance on, the information. The information is subject to change and, although based on information that KCP considers reliable, it is not guaranteed as to accuracy or completeness. This information may become outdated and KCP is not obligated to update any information or opinions contained herein. Articles herein may not necessarily reflect the investment position or the strategies of KCP. KCP is registered as an investment adviser and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. Registration as an investment adviser does not constitute an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability.