The New Castlebay Monthly: April 2025
- Callum Dunbar
- Oct 30
- 4 min read
Welcome to the “Castlebay Monthly”, a newsletter which features topics we hope you find of interest in the world of personal finance, financial planning and investing. Our inaugural newsletter features some thoughts and graphics on investing for the long term and dialling down the short-term noise. There will be an absence of market commentary and predictions. However, we will provide some graphics and thoughts on how markets have fared over longer time periods.
We avoid short-term predictions because what happens in the economy in the next 12 months is not only unpredictable, but can be immaterial to your long-term life and financial goals. This is particularly true right now, with markets reacting negatively to President Trump’s imposition of Tariffs across global economies. This is just noise, which is demonstrated in ‘The Market Doesn’t Care who’s in Power’ graphic below.
A Picture is Worth a Thousand Words
The Stock Markets
The Return to Normal
After two remarkable years in the financial markets, February and March brought a return to a more familiar pattern.
The US market (which drives global sentiment) declined by approximately 10% in four weeks, driven primarily by the uncertainty surrounding Donald Trump's proposed trade tariffs and concerns about their potential impact on corporate earnings.
Naturally, news headlines turned dramatic, market commentary took a decidedly negative tone, and some investors felt uneasy.
But here's the reality check we all needed: After two years of very little volatility, this is the market behaving precisely as we should expect it to.
The Reality of Market Rhythms
The relatively smooth sailing of 2023 and 2024 was the exception, not the rule. The financial markets have historically moved in a pattern that includes regular periods of decline interspersed with longer periods of growth.
Since the turn of the century, the average annual market decline has been approximately 16%. So, while the recent decline happened very quickly, what we're experiencing now is milder than what history suggests we should expect in a typical year.
The real outlier wasn't this decline; it was the previous two years of extraordinary returns with minimal volatility. While those returns were certainly welcome, they may have created an unrealistic expectation of normal market behaviour.
The Innovation Response
One concern driving the current decline is uncertainty about how new tariffs might affect corporate earnings. It's worth remembering that throughout history, companies have consistently demonstrated remarkable adaptability.
In the short term, yes, earnings reports may reflect some turbulence. But in the long run, the great companies of the world that make up your portfolio have a proven track record of innovating their way around new challenges. They adjust supply chains, develop new markets, improve efficiencies, and find ways to continue growing despite obstacles.
This adaptability is precisely why equity investments have outperformed other asset classes over time: not because they're immune to challenges but because they repeatedly overcome them.
Discipline: The True Wealth Builder
The path to financial success isn't paved with perfect market timing or selecting next year's winning stocks. It's built through consistent, disciplined behaviour during periods precisely like this one.
Lifetime investment success comes from continuously following your financial plan. Likewise, substandard returns and even lifetime investment failure come from reacting to current events. This principle is being tested now, and it is the perfect opportunity to demonstrate its truth.
Every market decline throughout history has eventually reversed, and successful investors understand that these temporary downturns are simply the “price of admission” for the long-term growth that often follows.
For those still in the saving stage (when you’re investing every month), the current period represents genuine opportunities. Each contribution you make during down markets purchases more units of the great companies of the world at discounted prices.
This Too Shall Pass
The financial media thrives on creating anxiety about short-term market movements. Their business model depends on keeping you glued to headlines and market updates. However, successful investors understand that daily market news is merely noise that distracts from the signal of long-term growth.
Our advice remains unchanged: ignore the short-term noise. Focus instead on the aspects of your financial life that you can control: your savings rate, your spending habits, and most importantly, your behaviour during market declines. If there's been no change to your circumstances and goals, your financial plan should not change. If there's been no change to your financial plan, your portfolio should not change.
While we do not know what positive or negative news awaits us in the coming weeks, we urge you to stay patient, remain disciplined, and continue behaving your way to wealth.
How to navigate the current Digital Age
Have you noticed how difficult it is to escape the news cycle?
The following essay outlines the strategies that Today's Investor can adopt to remain disciplined in an age of information abundance.
Rational Optimism
The media is not a friend of the disciplined and patient investor. Ignoring the key determinants of lifetime investor returns, the media focuses on short-term returns, market predictions, and negative news.
We present the following as an antidote to the onslaught of negative news:
Read
Why Financial Planning Is More Personal Than Finance [5 minutes]. Financial planning is deeply personal and requires an understanding of the unique stories and perspectives that shape how people view money.
Beautiful vs. Practical Advice [4 minutes]. Always prioritise practical advice over beautifully presented but ineffective solutions.
Good news: Happiness isn’t everything [3 minutes]. Exploring a more balanced approach to well-being.
Make Holding On for the Long Term Easy [3 minutes]. Sentence.
Empathy: Understanding Your Partner's Perspective [5 minutes]. An essential ingredient for building stronger relationships.
Listen
Fees vs. Fines: The Cost of Admission in Investing [12 minutes]. Exploring the psychological impact of uncertainty in investing, comparing it to the anticipation of a reward.
We hope you find the contents of our newsletter of interest and we always welcome your feedback and thoughts on topics we can explore in future newsletters. If for any reason you would like to unsubscribe, you have the option to do so at the foot of this email.
See you next month,
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