Together with Betterment

Happy Thursday,

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A quick breakdown — in case you don’t have the time.

1. ⭐ We’re hosting another free webinar TODAY — click to sign up!

2. ⭐ The driver of this correction has been a massive positioning unwind.

3. ⭐ We broke down 12 things we wish we were taught in our 20s.

4. ⭐ Recession panic is surging.

5. ⭐ In some ways, this correction looks very similar to 2022.

6. ⭐ Connect directly with us inside the Rich Habits Network!

Market Overview

Chart of the Week

The driver of this market correction has been a massive positioning unwind.

We exited December at all-time high “long” positioning across institutional, retail and foreign investors — everyone was “all in” the stock market. Since then, hedge funds have de-risked at a record pace. This de-risking was catalyzed by continued policy and tariff uncertainty — causing the S&P 500 to officially enter correction territory (-10%).

The S&P 500 has declined -10% in 20 calendar days, which is the 5th fastest correction in the last 75 years. The fastest ever was only 8 days during the Covid Crash.

During Trump’s first term, we saw equity positioning reach “light” territory during the China trade war. Wall Street estimates a similar positioning unwind to would take the S&P 500 down to the $5,250 range.

Despite all the uncertainty, we have yet to see any major Wall Street research firms come out and cut their earnings estimates into negative territory — an earnings recession. With that said, we are indeed seeing earnings estimates revised lower across the board.

Make Your Money Hustle

TAX TIP: You have until April 15 to contribute to and max out an IRA for 2024. And you might even be able to deduct those contributions on your 2024 tax return.

In Case You Missed It…

👉 Episode 109: What I Wish I Was Taught In My 20s

In this week’s Monday-morning episode of the Rich Habits Podcast (linked here) — Robert and Austin opened up about things they wish they were taught at a younger age.

They talked about 12 different things:

1. Start Early — Let compounding do its job.

2. Think Like an Owner — Don’t just buy the Apple iPhone, buy the stock.

3. Do Hard Things — Anything that you actually want in life is on the other side of “hard.” Choose your “hard” carefully.

4. Seek Value — Instead of looking for a “quick buck,” seek out high-value stocks and companies.

5. Negotiate Everything — Learning the power of negotiation is a critical business skill and valuable for major life purchases.

6. Systems Beat Willpower — Scaling and reaching your major goals will require more than just a desire to work hard. You need proper automations and routines in place.

7. Failure is a Teacher — Entrepreneurship and investing are filled with numerous shortcomings. View them as learning lessons, not a death sentence.

8. Credit Matters — A great credit score can open doors for you, and understanding debt at an early age is very valuable.

9. Your Network is Your Net Worth — Beyond just meeting people, curating mentors and peers who lift you up matters.

10. Opportunity Cost is Real — Saying “yes” to any opportunity is also saying “no” to another one. You must manage your time and energy with great care.

11. Health is Wealth — Put priority on your sleep, diet, and exercise routine. If you can’t, then you need to change something ASAP.

12. Emergency Funds Aren’t Optional — Saving 3-6 months of expenses shouldn’t be negotiable. Life throws curveballs, and you must be ready for them.

👉 Q&A: Preparing for a Recession, Invest $37K or Pay Off the Car, & Active Portfolio Management

Here’s a link to the Q&A episode that was posted this morning.

We answered questions from: Julia P, Carson O, Marc N, Ali R, Daniel R, Rdee L, Brooke M, and more.

You can submit questions for these episodes by asking them inside of the Rich Habits Network, replying to this email, or sending us a DM on Instagram.

The Rich Habits Podcast is available on Spotify, Apple, iHeart, YouTube, and wherever else you get your content!

Robert’s Callout

Recession panic is surging.

Google searches for “recession” have spiked to their highest levels since September of 2022. The last three spikes occurred in June 2022, September 2022, and August 2024.

Interestingly — each of those spikes didn’t necessarily result in the widespread economic downturn that everyone was fearing. This time around, the Federal Reserve is still only giving us a mid-single digit percentage chance of actually seeing a recession.

Every U.S. recession dating back to the 1980s followed a peak in the Fed Funds Rate. With the Fed currently in a ‘rate pause’ period — a lot of analysts are speculating on if rate cuts will be short-term bullish, but long-term bearish for the stock market.

The other interesting reason for the surge in “recession” search history is that many people believe the Trump Administration is willing to force the U.S. into a recession.

The U.S. government doesn't necessary want a recession, but it could potentially benefit from one in specific ways. In 2025, $9.2 trillion of US debt needs to be refinanced, and lower interest rates would make this cheaper. President Trump has called for lower oil prices and interest rates to combat inflation. A recession would naturally reduce oil demand, bringing prices down. Economic growth forecasts have already weakened due to trade tensions — and it’s unclear if the market has fully priced in the impact of tariffs.

With all of this being said — it’s a fool’s errand to predict what will happen next. There’s a reason why volatility is present in the markets; it’s because nobody knows what will happen next with the trade war or Jerome Powell’s Fed. For now — we aren’t in a recession and we’ve experienced a -10% pullback in the S&P 500 from it’s all-time highs. While the speed of the decline has been alarming, the pullback itself isn’t.

Austin’s Callout

In some ways, this correction looks very similar to 2022.

Looking at all market corrections since 1900 — this most recent one has been remarkably swift. So far, it bears a striking resemblance to the 2022 bear cycle. At first glance, that comparison might seem unusual. After all, the 2022 downturn was largely driven by rising interest rates, whereas this correction stems from a trade war and massive uncertainty.

However, there’s a logical reason why the market action over the past few weeks mirrors early 2022. Back then — the first casualties were the Mag 7 stocks, as portfolio managers adjusted their long-duration valuation models to account for higher discount rates. This time, we’re seeing a similar pattern. The drawdown has once again been led by the Mag 7, whose sheer concentration in major indices naturally influences overall market direction.

With that being said, I don’t expect 2025 to be a replay of 2022. Instead, I some strong parallels to 2018 — a year when solid earnings growth was overshadowed by contracting P/E multiples.

All of this bring us back to the image above. Follow the orange line and the light blue line. We were beautifully tracking with the blue line, which is the average S&P 500 return after the first Fed rate cut — if we avoid a recession.

Look closely at the drop-off in the orange line. We’ve completely disconnected from the light blue line — meaning the market is pricing in a high likelihood of a recession.

It’s impossible to know exactly “how much” a recession is currently priced into the market, but it’s certainly becoming more present in the eyes of both retail and institutional investors.

With the April 2nd ‘Reciprocal Tariff Day’ approaching — it sure feels like it’s a pivotal time in the market.

The Rich Habits Radar

• 👉 Fed Reserve maintained interest rates, signaling two potential cuts this year.

• 👉 Gold reached another ATH and extended gains after the Fed decision.

• 👉 Alphabet’s largest acquisition – buying cybersecurity firm Wiz for $32B.

• 👉 Ripple CEO announced the SEC has dropped its case against the company.

• 👉 NVIDIA unveiled Rubin AI chips & more during CEO Jensen Huang’s keynote.

• 👉 Shopify popped on news of listing move from NYSE to Nasdaq.

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Disclaimer: This is not financial advice or a recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.