The Sacramento Region Community Foundation works closely with our Investment Committee and investment consultant, Crewcial Partners LLC, to diligently steward and monitor your gifts that comprise over 700 charitable funds. We’ve received inquiries over the past few days in response to the market’s volatility and would like to share Crewcial’s recent update from April 7:
The Trump Administration’s recently announced tariff plans produced one of the most unusual market storms in recent memory. In addition to the speed and severity of the declines, it is notable that US stocks have been among the weakest globally, while the safe haven many have come to expect of mega-cap growth stocks has vanished. As shown in the chart below, the new policy has resulted in tariff rates reaching their highest levels in more than 100 years.
As witnessed late last week, capital markets are attempting to adjust prices to reflect these risks; this is likely to be a difficult and potentially drawn-out process, given the root cause of the decline is deliberate. Furthermore, on Friday April 4, Federal Reserve Chair Powell quite reasonably expressed his concern that tariffs could lead to persistently higher inflation.
Since the Great Financial Crisis (GFC), investors have become accustomed to various forms of central bank stimuli to stabilize markets. Yet, unlike the GFC or COVID crisis, where market declines were not the direct and immediate consequence of a specific government policy decision, Fed governors must now be wondering why it is their responsibility to stabilize markets in this case. While the Fed would feel obligated to step-in at a certain point regardless, our guess is that this level is quite a bit below that of current prices.
All of this points to the potential for a difficult time ahead, although we note that a self-inflicted market panic could, in theory, be quickly calmed.
Investment advisors generally feel compelled to remind clients not to panic during challenging market climates. While that advice is usually sound, it can do more harm than good when it downplays real risks or implies that staying the course is always the right decision. Strategies that were unwise to begin with don’t become wise just because they happened to work in the past.
Consider the fact that despite being down approximately 24% thus far in 2025, the Magnificent 7 as a group still trade at 33x trailing earnings and 27x on what may prove to be overly optimistic forward earnings. Furthermore, referring to long-term valuation measures such as the S&P 500 to reach its long-term average.
At the same time, we estimate that the beneficiaries of current market trends, such as non-US currencies and stocks, have only recouped a fraction of the market distortions that likely peaked in late 2024. In other words, if one’s strategy was to be heavily or nearly exclusively allocated to large US companies, staying the course is not the right answer at all. Unfortunately, the recent declines are simply the cost of owning overvalued assets; it’s better to accept this reality and objectively evaluate the forward return potential of other options. But what does this look like?
It is best to begin with an eternal truth—despite strong trends that seem firmly rooted, one must always respect the complexity and inherent uncertainty of the future, particularly as it relates to events that will drive market prices. A better approach involves remaining focused on the drivers of strong long-term outcomes—meaningful diversification, non-consensus thinking, multiple value-creation levers, and a clear-eyed assessment of valuation in light of the various risks present. This approach may appear unnecessary or counterproductive in years such as 2023 and 2024 when markets appeared indifferent to clear and significant risks among the top winners. Ultimately, however, ignorance is not bliss and investors must face reality; therefore, lasting success is only a possibility when a broad awareness of risk is your strategy’s constant companion.
As our advice is fundamentally and consistently based on the abovementioned principles, our clients, such as Sacramento Region Community Foundation are already well positioned for what is underway. As a result, in terms of investment outcomes, there is a call for optimism—periods of market stress and volatility, while unpleasant, have long been a key source of opportunity, with client portfolios allocating capital to the long-term bargains offered by markets during periods of panic.
Over the course of the weeks and months (and possibly years) ahead, the Crewcial team will be focused on advising our clients to maintain meaningful diversification, lean into previously well-priced areas (e.g., not the S&P ff00) that have become extraordinarily attractive from falling prices, and potentially add to/upgrade manager rosters (as the number of favorable options tends to increase during times of market stress).
Finally, we offer two pieces of advice:
One should never lose focus on the risk of permanent capital destruction. This does not mean the answer, particularly for endowment funds, is to become overly defensive. Instead, it means that risk should only be assumed when the reward is sufficiently high. Once markets begin to recover, or at least appear to be recovering, do not assume that conditions are reverting to an imagined status quo as appeared to be the case late last year.
While not an easy request, try not to focus too much on the current market value of the Foundation’s portfolio, as that only reflects the price it can be sold for today, not what it is truly worth. The latter will always become apparent over time. Consider your own portfolio’s value in early 2009, early 2020, or late 2022 compared to today. Even well-constructed portfolios are not immune from market panics, but they are not subject to the long-term damage that affects those more poorly constructed.
In a market rocked by policy shocks and shifting assumptions, success favors those who stay disciplined, diversify meaningfully, and adapt with purpose. Crewcial and the Sacramento Region Community Foundation are built for this moment—and well-positioned to turn today’s volatility into an enduring opportunity. Thank you for your continued confidence and trust.
If you have any questions about the Foundation’s portfolio, investment strategies, or questions about your charitable fund, please contact your Philanthropy Team.
