The S&P 500’s latest volatility displays a number of issues, a lot of them related. The index has shed 10% since mid-February 2025, pushed primarily by President Donald Trump’s aggressive tariff insurance policies. His March 2025 determination to impose 20% tariffs on Chinese language imports and levies on Canadian items triggered a $4trn market worth wipeout. Extra tariffs will probably be introduced subsequent week.

These protectionist measures have heightened fears of a worldwide commerce battle, and the S&P 500 briefly erased all post-November 2024 features. On the time of writing (26 March), we’ve seen a small rally. Nevertheless, the shares are nonetheless cheaper than once they have been when Trump took workplace.

Blended alerts

Volatility has turn out to be endemic as buyers grapple with conflicting alerts. Trump’s admission of a possible “period of transition” post-tariffs contrasts with the Federal Reserve’s stabilising commentary. 

This coverage whipsaw has compressed valuations, with the S&P 500’s ahead price-to-earnings (P/E) ratio retreating from 21.5 occasions to twenty.6 occasions. Goldman Sachs consequently revised its 2025 year-end goal to six,200 (from 6,500). The financial institution cited decreased GDP progress forecasts (1.7% vs 2.4%) and weaker earnings expectations.

And it’s these earnings forecasts which might be truly the essential bit. Earnings projections have deteriorated sharply. S&P 500 revenue progress estimates for the primary quarter of 2025 have almost halved from 12.2% to 7.7% since January. Full-year earnings progress forecasts now stand at 10.5%, down from 14%, as tariff impacts ripple by means of provide chains.

And this is essential for our funding theses. As a result of if a inventory was buying and selling at 14 occasions ahead earnings with a 14% ahead progress fee, it might appear to be truthful worth. But when that earnings expectation falls to 10.5% for the present yr and medium time period, buyers will begin to assume it’s overvalued. That’s what the P/E-to-growth (PEG) ratio tells us.

Technical alerts — mathematical calculations based mostly on historic price and quantity — recommend Oversold circumstances. Nevertheless, technical alerts aren’t forecasts and might’t account for issues like a nasty earnings report. Personally, I’m tempted to carry off till the following earnings season. This usually begins a number of weeks after the tip of March. It might be a nasty earnings season, a lot worse than the market is pricing in. The index may tank.

This one is bucking the pattern

Berkshire Hathaway‘s (NYSE:BRK.B) stock has surged while the S&P 500 has faltered. Shares of Warren Buffett’s conglomerate reached new all-time highs, outpacing the broader market by a major margin. This outperformance may be partially attributed to Berkshire’s sturdy efficiency, but in addition it’s substantial money place, which stands at a formidable $334bn.

Regardless of holding main stakes in S&P 500 firms like Apple and Financial institution of America, Berkshire’s money reserves present a buffer in opposition to market volatility and potential alternatives for acquisitions throughout market downturns. This technique may show much more advantageous if the inventory market experiences an additional pullback.

Nevertheless, buyers ought to concentrate on the chance related to Berkshire’s heavy US focus. This US focus has been a power in latest many years however some could argue it’s over concentrated geographically.

Nonetheless, the corporate’s observe document and Warren Buffett‘s investment acumen make it an attractive long-term holding. I’ve added the inventory to each my daughter’s portfolio and mine.