The Panic / Not Panic Playbook

“If you can keep your head when all about you are losing theirs...”
— Rudyard Kipling

“Be fearful when others are greedy, and greedy when others are fearful.”
— Warren Buffett

This week, fear is winning. The point losses we experienced on Thursday and Friday were steep. But the additional drop in Monday’s futures and then the open? That pushed sentiment to a new level. If the market continued declining at this pace, it would theoretically reach zero by the end of the month.

We do not expect that to happen.

What we do expect is that the pace of loss will eventually slow, then stop, and eventually, reverse. But between now and then, panic may persist—and what we do during those moments of panic determines not only long-term outcomes, but reveals how prepared we truly were for this inevitable part of investing.

Not Our First Bear

Every time markets correct, we hear the same question:
“But this time is different… isn’t it?”

We don’t think so.
Something is always different. But the cycle of investor behavior—euphoria, concern, fear, and panic—remains consistent. When the market is down 5–10–15%, we view it as part of the cost of owning equities. At those levels, we often seek to increase equity exposure and rebalance into recently discounted assets.

But when we pass the 20% mark—officially entering bear market territory (we are at/near this level for the S&P 500 as we write)—the mood changes. The data fades into the background, and emotion takes over. This is when the most damage is done, and also when the biggest opportunities quietly emerge.

So what’s our move?

We pause. We assess. We recalibrate.
We do not reduce risk reactively—but we do get selective.

Policy, Panic, and Portfolio Action

Last week, we wrote about the market’s “gut check.” This week? It’s evolved into a full-blown market stress test.

The S&P 500 didn’t just flirt with correction territory—it fell decisively into it, ending Friday down over 15% from recent highs. These are the moments that separate strategy from slogans. While many default to “stay the course,” we believe in a more thoughtful approach: do the work, follow the plan, and act when appropriate. And that’s exactly what we’ve been doing.

As we’ve said before: at down 5%, 10%, even 15%, where appropriate, we look to add to high-quality assets to client portfolios. Good companies go on sale, and the market’s normal fluctuations can create opportunity. But once we approach or exceed a 20% decline—what’s officially considered bear market territory—our mindset shifts because the collective market mindset shifts.

This is no longer the time to increase equity risk. Instead, we focus on refining portfolios—ensuring we’re holding what we want to hold for the long haul. That might mean upgrading the quality of your investments, tax-efficiently swapping into assets we’ve long admired but previously deemed too expensive, or using the pullback to trim concentrated positions that now carry less tax impact, etc.

We’re also evaluating areas that have held up—like long-duration bonds or hedging strategies—to determine whether they’ve served their purpose and can be reallocated. Overall equity and or risk levels may remain steady, but portfolio quality and structure can still improve.

And for the steel gut among you, yes, buying into down markets can still make sense long-term at these levels. However, our philosophy generally has us refrain from increasing equity exposure any further until assets are even cheaper (as a guide, generally down more than 30% from the highs) or there is clarity in the events causing the disruption.

All of the above is high level, for specifics on your portfolio please feel free to call or we will be reaching out shortly.

So what has been going on…

Market Moves: Panic or Policy?

“Liberation Day”: A Defining Shift in U.S. Trade and Manufacturing Policy

Markets don’t just hate uncertainty—they react swiftly when they believe policy decisions could have unintended consequences. This week, we saw what some are calling “Liberation Day,” marking a major shift in U.S. trade and industrial policy.

Policy Pillars

• 10% universal tariff on all imports into the U.S.
• Targeted tariffs ranging from 12% to 46% on goods from top trade partners
• Strategic reshoring and industrial revival as central economic goals

While the goal is to boost domestic industry and reduce supply chain vulnerability, the potential ripple effects—economic, inflationary, and geopolitical—are significant.

What the Experts Are Flagging

1. Inflationary pressures
   Federal Reserve Chair Jerome Powell has stated these tariffs could push inflation higher. As import costs rise, businesses are likely to pass those costs to consumers.
2. Slower economic growth
   Higher prices and increased input costs may reduce consumer spending and business investment, dampening overall economic momentum.
3. Recession risk rising
   While estimates vary, recession odds have increased—some economists place the probability at 40% to 60%—driven by disruption to trade, capital investment, and confidence.
4. Employment disruption
   Industries with international supply chains may see margin compression and layoffs, particularly in sectors like tech, autos, and retail.
5. Global trade tensions escalate
   Retaliatory tariffs are already in motion, raising the risk of a prolonged trade conflict with lasting implications for global commerce.

The Bottom Line

Potential Upside:
Domestic manufacturing gains, increased supply chain resilience, job growth in strategic sectors

Potential Costs:
Higher inflation, market volatility, recession risk, and strain on global trade relationships

And in the Background…

Speculation continues to swirl:

• “This is all negotiation posturing.”
• “Trump is pushing markets down to force the Fed’s hand on rate cuts.”
• “He overplayed his hand—or is playing 4D chess.”
• “Markets were overvalued anyway—this is the scapegoat.”
• “Bad advisors.”
• “People just hate abrupt change.”
• And plenty more…

Some speculate that President Trump, often viewed as pro-market, may be operating outside his circle of competence on this issue. Whatever your opinion, one thing is clear: this is policy-driven volatility—not a financial crisis, not a banking collapse, and not a systemic breakdown.

As Jeremy Siegel, Professor Emeritus at the Wharton School and author of Stocks for the Long Run, put it:

“This may be the worst economic policy mistake in 95 years.” — via CNBC

That statement doesn’t come lightly. The last time we saw this level of aggressive trade interference was Smoot-Hawley in 1930, which deepened the Great Depression through cascading retaliatory tariffs. We hope those lessons have been learned. But we prepare as if they may not have been.

Can President Trump Really Do This?

Under the Trade Expansion Act of 1962, the executive branch has unilateral authority to impose tariffs under the guise of national security. Courts may challenge that rationale over time, but for now, the authority stands. This is part of what’s creating the current uncertainty—and it won’t be easily undone by Congress.

What Happens After Declines?

Corrections are painful—but historically, they create opportunities.

• Average 12-month return after a 15%+ decline: +21.7%
  (Ned Davis Research, based on historical S&P 500 data)
• Selling during panic often leads to missing the recovery
• Long-term discipline tends to outperform short-term emotion

What We’re Doing—and Why

At Members’ Wealth, we aren’t reacting emotionally—we’re following a process built over years of experience in volatile markets:

• As noted above rebalancing based on market and asset moves
• Tax-loss harvesting, where appropriate
• Holding more cash or short-duration bonds in select portfolios where clients need liquidity
• Deepening research across public and private markets
• Executing non-investment strategies where appropriate that align with long-term plans, such as:
  • Roth conversions
  • Gifting and legacy strategies
  • Diversifying concentrated positions
  • Strategic IRA withdrawals, etc

This isn’t just about managing investments—it’s about navigating change in all areas of financial life.

Final Thoughts: Panic ≠ Strategy

This isn’t a movie where we wait for a scripted ending. It’s your financial life—and we approach it with focus, clarity, and adaptability.

Markets may fall further. Or recover on a single policy shift. Either way, we’re not sitting still—we’re engaged, informed, and taking appropriate action.

6 Things We’re Watching This Week

1. Tariff retaliation and global responses
   Will key trade partners escalate, and what impact will that have on global supply chains and risk assets?
2. Fed commentary and rate expectations
   Powell said it’s “too soon to tell” last week. This week’s tone could change if market volatility intensifies.
3. Corporate earnings reactions
   We’re closely tracking forward guidance, margin commentary, and capital spending adjustments.
4. Market sentiment indicators
   VIX levels, fund flows, and investor sentiment are helping us separate fear from positioning.
5. AI breakthroughs amid the noise
   Quiet innovation continues. We’re tracking developments that could drive long-term growth beneath the headlines.
6. Jobs and unemployment data
   Signs of softening employment could move the Fed—or the administration—into a different policy stance.

Want to Talk Strategy?

If you haven’t scheduled your Q1 review, now’s the time.
If you want to know what trades we made—or didn’t—and why, let’s connect.
And yes—we’ll be in touch more often as this plays out.

Stay grounded. Stay focused. Let us do the worrying.

Investment strategies, including rebalancing, do not guarantee improved performance and involve risk, including potential loss of principal. Past performance does not guarantee future results.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. 
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

About the Author – Dane Czaplicki, CFA®

Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.

Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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