Recent concerns about a new era of stagflation in the U.S. have emerged due to escalating tariff wars. If the tariff war expands and companies are left paying higher prices for parts, it could create an environment where growth slows as consumers are less willing to buy at higher prices, while inflation remains as input costs all continue to rise.

While it’s too early to sound the alarm, looking back at the painful period of stagflation from 1973 to 1982 provides critical insights about how investors can protect themselves if it gets worse. ..

Last Tuesday, March 11th, the S&P 500 hit the official “correction” level midday - 10% off the all-time highs set just 20 days earlier on February 19th. It was the 5th fastest 10% decline in the past 75 years, driven primarily by tariff uncertainty.

Below are a few thoughts I’ve been thinking about for the past few weeks. As always, I’ve done my best to be as apolitical as possible…

If you’ve been paying attention to the stock market lately, you might have noticed some serious gains. One of the biggest drivers for this growth has been the capital expenditures (“capex”) of big technology companies including Alphabet, Amazon (AWS), META, Microsoft, and others.

Capex refers to the money companies spend on long-term assets like buildings, equipment, or technology. For these companies, this often means pouring billions into data centers, technology chips, and other infrastructure…

Recently, Goldman Sachs forecasted modest 3% annualized returns for the stock market over the next decade. Among the many reasons cited, a few include -

• Higher starting valuations – the overall index is more expensive than historical norms.

• Market concentration – A few individual companies have carried the index higher. If they falter, the market falters.

• Interest rates – Rising rates make it more expensive for companies to borrow and invest, which leads to slower growth.

Because of the variability of stock market returns in the short run, I steer clients away from short-term tactical changes to their portfolio and prefer to rely on the weighty evidence of history, along with long-term thematic trends in the market.

While no one has consistently and accurately predicted what the stock market is about to do, several well-respected firms provide long-term outlooks that have proven to be more accurate than short-term predictions.  

Below are the 2025 10+ year estimates…

The massive recovery we have experienced over the past 15 years is remarkable and has left many investors wondering when the next drop will happen. It may seem inevitable to you. And if history is any guide, it is inevitable. But that doesn’t make it predictable. Beginning in 1994, valuations looked stretched, and many Wall Street veterans started calling for a correction. We now know this was very premature, and stocks more than tripled before eventually plummeting.

This is the most classic example of the differences between inevitable and predictable. Today’s market is not comparable to the tech bubble, with more reasonable valuations and strong earnings growth. However, valuations look a little expensive compared to their historical averages (21.5x vs. 16.7x average)…