As of Friday, April 4th, the S&P 500 Index (SPX) has declined approximately 17% from its all-time high on February 19, 2025. Additionally, the Russell 2000 Index is down 25% from its November 25, 2024 peak. Astoria is proactively implementing the following firm-wide strategies in response to ongoing market volatility and increasing signs of economic contraction.
The firm is currently focused on:
1. Portfolio Reallocation – We are and have been actively reducing exposure to expensive and cyclical growth sectors and reallocating toward more defensive stocks. Notably, our portfolios were underweight the “Magnificent 7” stocks prior to the recent market downturn, which has contributed positively to our portfolios. Tilting away from the Mag 7 is why we want to use equal-weighted products. Past performance is not indicative of future results.
2. Tax-Loss Harvesting – We are systematically realizing losses where appropriate in order to enhance after-tax returns across client portfolios.
3. Fixed Income Positioning – Fixed income is expected to play a crucial role in the months ahead. Our allocations remain dynamic, with a current emphasis on higher-quality corporate bonds and U.S. Treasuries.
4. Ongoing Portfolio Evaluation – We continue to conduct thorough scenario analyses and portfolio reviews to ensure alignment with evolving market conditions.
We believe the current environment reflects more than a temporary growth scare; rather, markets appear to be increasingly pricing in the risk of a recession. In such a scenario, we estimate that the S&P 500 could face an additional 5%–8% downside. Equity valuations remain elevated, with the index trading at approximately 19 times forward earnings—only three multiple turns below its February peak. Should earnings decline by 10%, which is consistent with historical recessionary patterns, further market weakness is possible.
Considering that the average bear market typically spans nine months, and we are likely only 1.0 to 1.2 months into the current downturn, a continued period of volatility may lie ahead.
Please reach out if you would like to talk with Astoria’s investment team about any of these initiatives or anything else on your mind.
Best,
Astoria Advisors
Originally published April 6, 2025.
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