By Jeremy Bryan
DOGE. Tariffs. If you have been listening to the financial news at all in 2025, you have certainly heard these words many times over.
The events in Washington are dominating the headlines in a way that they have not in some time. Since 2023, most discussions about Washington and the influence it has on markets have been directed toward the Federal Reserve (the Fed) and monetary policy. The Fed’s attempted balance of controlling inflation while preserving economic growth (and their perceived failure / success in doing so) were the central points of discussion for investors.
That is not the case any longer. The Department of Government Efficiency, an advisory body led by Elon Musk, has been a consistent source of news based on the actions taken to reduce government spending. While a lot of discussion has occurred on social media and news networks, many of the initiatives have been redacted, adjusted, or misinterpreted, so the actual results and implications for our economy and the stock market are less clear.
Second, tariffs have taken center stage as the predominant tool for the early stages of President Trump’s fiscal trade agenda. Because tariffs do not require congressional approval, they can be authorized and enacted with little oversight. The economic strategy appears to use tariffs as a tool for both trade and other policies like border control. As tariffs with our largest trade partners have been implemented, investors have grown increasingly concerned about potential trade wars and their economic effects.
It has long been our determination that Washington influence is overrated when it comes to long-term economic or market trends. The S&P 500 is comprised of companies that have competitive products and services that allow them to grow their earnings for the benefit of shareholders. As new ideas emerge, legacy companies can often be left behind while new entrants take the lead. That is capitalism at work. For the stock market to grow, the US must achieve economic growth that allows the companies to thrive and grow earnings over time. All of this holds true regardless of who is in the White House.
We still believe in these principles, but we also cannot ignore the recent events that are central to investors’ concerns. It is our job to acknowledge that current fiscal policies and agenda are influencing market volatility due to the wide range of potential outcomes.
Could the fiscal agenda result in more balanced trade, a higher proportion of company investments in the United States, and greater economic growth? Yes. On the other hand, could DOGE create job uncertainty while tariffs increase trade friction, limit supply, and raise consumer prices – potentially fueling a consumer-led recession? Yes, as well.
Based on these nearly opposite yet completely plausible outcomes, what are investors to do? In 2025, we have been consistent advocates for bringing an umbrella and focusing on what you control. Bringing an umbrella includes rebalancing to reduce excess risk, using protection strategies, and taking advantage of long-term growth opportunities. Focusing on what you can control means action items within investment plans that could have a lasting impact, including appropriate asset allocation mix incorporated with tax planning or estate strategies that could provide long term benefits.
Remember, volatility and short-term influences are nothing new to stock and bond markets. There will be a time when Washington is no longer center stage of the investment universe. This does not mean, however, that concerns go away completely – they merely shift to something else. A proper investment plan acknowledges this uncertainty, remains strategic during both good times and bad times, and makes changes based on prudence over emotion.
