Welcome to another episode of “Ethel’s Diamond Post.” The ever-changing landscape of Trump economics is a complex puzzle, with most advisors’ predictions offering different algorithms and scenarios based on the “hot topics” on Wall Street, such as ongoing trade tensions, corporate earnings, the hype around artificial intelligence, and the impact of rising bond yields. The exact destination remains unknown, hidden in speculation and intrigue. Despite ongoing efforts to identify the route or location, all attempts have been inconclusive, keeping the destination elusive. Meanwhile, the S&P 500 achieved its best third-quarter performance since 2020. This momentum continued through Q3, supported by stable market conditions and low volatility. Positive investor sentiment, strong corporate earnings, and optimism about artificial intelligence and potential monetary easing drove gains. So, what caused the S&P 500 to drop 2.71% and the Nasdaq to fall 3.56% on Friday?
Unexpectedly, the markets turned volatile as President Trump announced plans for a ‘massive increase’ in tariffs on Chinese imports. This decision, a blow to both American consumers and companies, came in the wake of China’s restrictions on rare earth minerals crucial to the tech and defense industries, new port fees on American ships, and an antitrust investigation into Qualcomm. The potential impact of this tariff hike on the US economy is significant, with the possibility of higher prices for consumers and businesses, lower earnings for companies reliant on exports or imports, and slower economic growth. As a result, technology companies sensitive to trade tensions experienced sharp declines. Wall Street, along with most advisors and investors, is grappling with the implications of this for the economy and the capital markets. However, the market’s potential for recovery remains strong, giving investors hope that this situation is temporary. Concerns over rising interest rates and mixed economic data prompted a reevaluation of risk, causing a broad selloff in tech and growth sectors. Additionally, renewed geopolitical tensions and uncertainty about future Federal Reserve policies have heavily influenced market sentiment, pushing traders to seek safer assets and reduce their stock holdings.
At VZD CAPITAL MANAGEMENT, LLC, we believe in active investment management, making strategic adjustments when necessary to reduce risk while staying on track for long-term results. The unexpected decline caught many retail investors off guard, especially after weeks of steady gains and positive market sentiment. We see Friday’s steep decline as a signal to re-route, but we remain vigilant to stay the course. Just as a GPS reroutes when it detects a change in the initial plan, yet still heads toward the destination, VZD begins with your goals in mind, focusing on personalized objectives for growth and preservation to reach your wealth destination. We consistently reevaluate high-growth companies due to rising interest rates and overvaluation. Friday’s sharp decline particularly affected semiconductors and AI-related companies. Retail and consumer goods companies faced selling pressure because of fears that tariffs and rising costs could hurt earnings in the coming months. The energy and industrial sectors are not immune to the uncertainty lingering in the background. Market participants are closely monitoring global economic uncertainties, including trade disruptions and geopolitical risks, which are impacting demand and energy prices. Moreover, we recognize that consumer sentiment remains fragile amid the ongoing US government shutdown, now in its 12th day on Sunday. This shutdown has delayed key government economic reports and heightened consumer anxiety over inflation and job security. It has also led to a decline in consumer spending, potentially impacting earnings in the retail and consumer goods sectors. The shutdown is affecting the stock market as well, as investors remain uncertain about the economic outlook and the delays in key financial reports.
these uncertain times, we want to reassure you that we are committed to guiding you through these market fluctuations and helping you make informed decisions. Our proactive approach to investment management involves constantly monitoring market conditions, making strategic adjustments when needed, and focusing on your individual goals. This ensures that we are continually working in your best interest, providing you with reassurance and confidence in our ability to navigate market fluctuations.
VZD is proactive in staying vigilant about diversification within and across asset classes. We don’t believe in “putting all our eggs in one basket.” We have included rare earth stocks because they are essential for electronics, electric vehicles, and defense technologies. We expect that tariffs and trade uncertainties might impact revenue and corporate performance. The news about the potential increase in Chinese goods unsettled the market. The concern is that higher tariffs could slow U.S. economic growth. Investors understand that tariffs could push up prices for consumers and businesses. If costs increase, companies will earn less, and stock prices may drop. Companies that depend on exports or imports could face challenges, which is why the market experienced such a sudden decline.
At VZD, we do not believe in panic-selling or making drastic changes in response to market fluctuations. Instead, we adopt a steady approach, taking profits and shifting into safe-haven assets such as gold, precious metals, fixed-income vehicles, and quality dividend-paying stocks. Our decisions are always grounded in fundamentals, and assessments of earning reports are more than just numbers. They are vital indicators of a company’s health and prospects. We recognize that artificial intelligence has been a hot topic in the stock market this year. A significant amount of assets has been invested in AI-related companies, with expectations of rapid growth and high returns. However, we also understand that fast growth can lead to overvaluations, pushing stock prices beyond reasonable levels. Our commitment to sound investment principles ensures that our investors’ interests are always protected. These principles include thorough research, analysis, diversification, and a long-term perspective. We carefully assess the potential of AI-related companies by considering their growth opportunities and the risk of overvaluation, ensuring our investments are solid and aligned with our clients’ goals. We also prioritize transparency and open communication, keeping our clients informed about our investment choices and the reasons behind them.
Our commitment is to stay engaged, rotate into safe assets as needed until the GPS can stop the frequent rerouting, and continue taking profits while maintaining a substantial cash reserve. We do not try to time the market, but we believe in keeping a significant cash buffer to buy assets and stay diversified. This approach to strategic engagement should make you feel secure and confident in our method. When we rotate into safe assets, we are essentially reallocating our investments from riskier assets to safer ones, such as bonds or cash equivalents, to protect our clients’ portfolios during market downturns. We hold a large cash reserve to capitalize on buying opportunities that may appear during market downturns. This strategy helps us stay diversified and safeguard our clients’ investments amid market fluctuations. Rotation will continue until clarity returns. Although sell-offs can be uncomfortable, they give us the chance to buy undervalued assets caused by falling prices, provided the companies have strong fundamentals. The market keeps rewarding resilient business models that align with long-term societal and economic trends. We will keep monitoring earnings growth, product innovation, and strategic partnerships from these leading companies. Additionally, observing the competitive landscape and any evolving regulatory environments will be crucial. The ability of these firms to sustain their momentum amid rising competition and potential market shifts will determine their long-term impact.
Long-term success depends on maintaining a long-term view and investing in quality companies, whether they pay dividends or are emerging growth leaders. As many stocks are currently overvalued, we take profits from those that have grown significantly in a short time. Many retail investors sell out of fear or during heightened volatility. We also carefully consider the tax effects of realizing gains, whether short-term or long-term. Our primary focus is to serve as a personalized investment advisor who avoids a “one-size-fits-all” strategy. We will provide universal updates whenever market conditions trigger concerns that might cause you to rethink your involvement in the stock market.
We have a small number of clients who haven’t returned the compliance forms yet, so I want to ensure you’re aware of the updates to the ADV Part 2A and 2B. I will begin calling to see if the forms are on their way back or to verify if you did not receive the information. Additionally, we understand that scheduling Zoom appointments or in-person meetings is essential to make sure your portfolio aligns with your goals, time horizon, and current standard of living. We offer in-house estate planning and will follow up to ensure your assets are protected so you never have to go through probate court proceedings. If you have any questions or concerns, please don’t hesitate to contact us directly. We can answer any questions or schedule a meeting if you’re feeling anxious about the ever-changing economy and the ongoing political shifts.
Ethel is now among the top 6 percent of wealth managers in the Greater Kansas City area. She will be honored as a 2026 Five Star Wealth Manager and featured in Kansas City Magazine in February 2026. These accolades reflect the trust of our incredible clients, and we sincerely thank you for your loyalty. Please consider us for your referrals if you know others who could benefit from our services. We appreciate your continued support and will update you on any changes that may impact your portfolios. Feel free to reach out via email at info@vzdcap.com or ethel@vzdcap.com, or call us at (816) 726-7066.
Happy Fall!
With Gratitude,
Ethel, Nikisha, and Nathan
