It probably goes without saying, but stocks has experienced significant volatility so far in 2025. The President’s on-again/off-again tariff plans have wreaked havoc on the markets.

Most economists suggesting that automotive, housing, and agricultural industries are likely to be the most impacted by tariffs. But even in a best-case scenario, the economic impact of these trade restrictions will be positive only over the long-term, and successful only if deglobalization and reshoring efforts can be successfully implemented.

In the near-term, a trade war has no winner, and economic growth may be stunted by rising unemployment (further worsened by massive federal layoffs) and rebounding inflation.

As a result, the forecast for the remainder of 2025 is decidedly murky. Investors should certainly be ready for continued spikes in market volatility. At the same time, and especially for small company stocks, volatility is not necessarily something to be feared. Short-term volatility can provide buying opportunities that lead to long-term success. Historically, small-cap stocks have performed well following periods of high volatility.

Amidst all the economic and market uncertainty currently settling around us like a smoggy weekend morning in L.A., it can be reassuring to remember the dynamics that drive stocks over the long-term. Panic selling or moving to cash out of fear for what the market may bring can be problematic to long-term returns, particularly if the feared worst case scenarios never materialize and the market continues its upward trajectory.

Remain aware of the macro factors that are driving the behavior of other investors, but don’t be governed by the fear and uncertainty that accompanies each soundbite.
 
Also, aways remember that the stock market is cyclical in nature. Approach your portfolio decisionmaking with a critical mind and an eye firmly set on the long-term.
 
Companies like our focus stock in the current issue of the SmallCap Informer are selected with a nod to near-term economic and industry drivers but with overridingly-solid prospects for long-term future. Our March 2025 pick is an emerging leader in the growing healthy snacking movement that's selling at an attractive price. It may not linger long in the buy zone, so act soon!

Stay the course!

• DOUG GERLACH

Subscribers can read Doug's complete commentary and the in-depth profile of our recommended small company stock in the February 2025 issue of the SmallCap Informer stock newsletter. Not a subscriber? Subscribe to the SmallCap Informer and get monthly small company stock recommendations and updated buy/sell prices for each of the 45 high-quality small company stocks currently covered in the newsletter.