Current market environment performance of dynamic, risk-managed investment solutions.
By Will Hubbard
In Michigan, the seasons change fairly predictably—spring, summer, autumn, and winter. But in the markets, the only predictable season right now is volatility.
Shifting conditions across asset classes
The S&P 500 has fallen nearly 15% from its recent highs, and April is on track to be one of the worst months for equity investors in the past year. Much of this can be attributed to sudden, unpredictable changes in tariffs. The CBOE VIX Index (VIX)—a common measure of market fear—recently spiked above 50, signaling heightened uncertainty. Despite this, S&P 500 earnings are still growing at around 9% for the year. That could change with future revisions, but it highlights how erratic market performance has been.
In fixed income, we’re seeing a flight to safety. More than $18 billion flowed into short-term U.S. Treasurys in April—the fastest pace in over two years. Meanwhile, the broader bond market has seen nearly $48 billion in outflows this month, and long-term Treasurys (10-year or longer maturities) have lost nearly 3.5% in price. Bond funds have now experienced five consecutive weeks of outflows, and while credit spreads are widening, they remain relatively moderate. The Federal Reserve has held rates steady, and the 10-year Treasury yield has barely moved.
Commodities, on the other hand, have surged. Gold is up nearly 30% year to date. Wheat has risen about 35%. Copper is trading at multiyear highs. Oil prices, however, have fallen sharply—down 13% in April alone. These shifts reflect a broader investor move away from riskier assets like stocks and oil and toward tangible stores of value such as cash, short-term bonds, and precious metals.
An uncharted market season
Howard Marks of Oak Tree Capital noted in a recent memo that today’s trade war presents an unprecedented economic challenge—one with no reliable historical reference points. Without a clear road map, investors must consider not just forecasts but also the probability that those forecasts could be wrong. As Marks suggests, this calls for investment strategies that are robust enough to account for multiple potential outcomes.
At Flexible Plan Investments (FPI), that’s exactly what our dynamic, risk-managed approach is designed to do. Today’s environment is uncertain: The scope and impact of tariffs remain unclear, and while a recession may be likely, it’s not set in stone. That’s why our strategies rely on quantitative methods to size and adjust allocations based not on predictions, but on probabilities. What happens if the future is worse than expected—or better? Our approach allows us to build portfolios that respond to data as it changes, helping investors stay prepared in this uncertain market season.
Preparing for all conditions
Right now, every major market—stocks, bonds, and commodities—is being pulled in different directions. Assigning probabilities to possible outcomes is a more practical path than trying to predict each twist and turn. For example, what are the odds that stocks will continue to fall? That bond flows will stay concentrated at the short end of the yield curve? That gold could rise from a 30% gain to 60% or more?
By assigning probabilities like these, we can build portfolios that are resilient to a wide range of outcomes—even without knowing exactly what’s ahead. This is the value of the quantitative approach: It helps us understand relationships in the market and create asset allocations that adapt to changing conditions.
As we transition from spring to summer, the data suggest that the market is also shifting—from a growth-driven environment to one dominated by volatility. Pressures from geopolitics, inflation, interest rates, and economic growth are all converging. Investors are looking for portfolios that can grow if conditions improve—but also defend if they don’t.
This is where active management can make a meaningful difference. A dynamic, adaptive approach—rather than a static, set-it-and-forget-it strategy—can help investors navigate what’s next.
That’s why we’ve been talking more about commodity trading advisors (CTAs). These strategies offer diversification not easily accessible through traditional portfolios, with exposure to alternative asset classes like currencies or agricultural commodities. While CTAs have experienced a drawdown this year as their models adapt to the new market season, they could present new opportunities as volatility continues.
The key is staying nimble—maintaining a well-diversified, risk-aware portfolio designed not just for one outlook, but for many. In a season defined by uncertainty, preparation, flexibility, and robust management matter more than ever.