March 2025 Market Memo
S&P 500 plunged 5.75% amid a tech-led correction, driven by declining sentiment rather than tariffs. Despite volatility, liquidity remains stable, signaling the downturn may be nearing its end. Tranquil Tide Wealth prioritizes risk control, staying conservative while eyeing opportunities in large-cap tech post-20% correction.
MARKET MEMO
Market Overview, Analysis, and Outlook:
S&P 500 Index Performance this month: -5.75%.
Macro Environment
At the beginning of the year, we anticipated a significant correction in the U.S. stock market in 2025. In March, the market faced immense pressure, particularly in the technology sector. However, our observations highlight several key differences from past patterns. We view the tariff issue as a surface phenomenon; the primary driver is the market entering an adjustment cycle fueled by declining sentiment, with tariffs merely serving as a pretext for the decline.
Technology stocks were the primary targets of the market purge.
During the downturn, no single week saw a uniform decline across the entire market.
Overall market volatility did not rise significantly.
Market liquidity showed no notable tightness.
This suggests that the current wave in 2025 is nearing its end. However, a correction driven primarily by liquidity or economic issues is not part of this wave.
Risk Control
In the final days of March, it was difficult for us to fully shield ourselves from the market’s impact. Nevertheless, the challenging environment underscored the critical importance of risk control. As a fund prioritizing risk management, our objective remains unchanged: to operate conservatively with risk control as the top priority. We will not go all-in until the market fully stabilizes, and we ask our investors to remain patient.
U.S. Stock Market Outlook
In the short term, the market environment is approaching a bottom. Both retail investor sentiment and capital outflows are showing signs of exhaustion, indicating insufficient momentum for further declines. The months of April and May are expected to be a strong period.
Future Outlook and Strategy:
We are shifting our focus from traditional industries to technology, particularly large tech firms. Following a roughly 20% correction, valuations are no longer high, and left-side trading continues to favor tracking indices. Once the market improves, we will identify and monitor strong sectors to find opportunities to trade individual stocks.
Conservatism is the hallmark of our company and my trading style, and this will persist.
Government bonds represent a significant opportunity, though we have yet to identify an ideal entry point.
Wei Cheng
CEO and Chief Investment Officer
Tranquil Tide Wealth
Written on March 31, 2025