Lessons from the past, strategies for the future

Time in the market is far more powerful than trying to time it.

From investing to economics to politics, patterns emerge, lessons resurface and the past becomes a powerful guide for navigating today’s unpredictable landscape. Timing, perspective and adaptability can make all the difference in managing the complexities of modern markets.

Raymond James Chief Investment Officer Larry Adam revisits a few critical decades that still resonate today.

1970s: Trade policy and oil shocks

The 1970s was a time of rising inflation, oil shocks and growing trade tensions. Today’s headlines might echo the past, but we’re not headed for a rerun of 1970s-style stagflation. Inflation today, while higher than the Federal Reserve’s (Fed’s) target of 2%, is far less punishing and unemployment is roughly half of what it was back then.

Regarding trade policy, the 1970s saw Congress provide the president with powerful trading tools, including the International Emergency Economic Powers Act (IEEPA), which gave the White House authority to regulate trade during national emergencies.

Today, Trump 2.0 has revved up the same toolkit. Tariffs are back, trade deals are being reworked and IEEPA is once again front and center as its authority is being challenged in the courts. With average tariff rates projected to hit 15–17%, we do expect some short-term inflation and economic drag, but not a full-blown recession.

Long gas lines and soaring prices led to moves aimed at reducing dependence on foreign oil. Today, the US is far more energy independent, and that shift should help keep oil prices more stable.

1990s: Fed prowess and fiscal discipline

From a market and economic standpoint, the 1990s might be one of the most enviable decades in modern history. The US experienced its second-longest expansion and the Fed struck a near-perfect balance – cutting rates just enough to keep momentum going.

The Fed faces a similar opportunity today. With the fed funds rate hovering around 4.5%, there’s plenty of room to ease if needed. We expect two rate cuts beginning in the fourth quarter, with at least two more likely in 2026. These moves should help cushion any temporary slowdown as businesses work through pre-tariff inventories, consumers adjust to initial tariff price shocks, and hiring cools a bit.

Growth should also accelerate next year. The proposed “One Big Beautiful Bill” could provide a dose of fiscal stimulus, even as it keeps the deficit high. Our forecast calls for US GDP growth of 1.4% in 2025 and 1.5% in 2026.

Another lesson from the ‘90s worth remembering: Fiscal discipline matters. From 1999 to 2002, the US ran budget surpluses – helping pay down some of the national debt. That sense of responsibility was driven, in part, by the fact that interest payments consumed 18% of federal revenue. We're right back at that level today, and there is little sign of a bipartisan appetite for restraint. Even with a growing economy, rising entitlement spending and rising interest costs are crowding out spending on other priorities. It’s a warning sign that shouldn’t be ignored.

2000s: Tech and US exceptionalism 

In the early 2000s, technology felt futuristic, even if it was a bit clunky. Today, it’s sleek, seamless and everywhere – woven into nearly every moment of our lives. Unlike the speculative frenzy of the early 2000s, today’s tech sector is built on solid ground – mature companies with real earnings and diversified revenue streams. With AI accelerating innovation, we expect technology to keep transforming industries across the economy. That’s why it remains one of our top sectors, alongside industrials and health care.

For the broader market, we’re a bit cautious in the short term. Our year-end S&P 500 target is 5,875, reflecting potential downward revisions to 2025 earnings – from the current consensus of $262 to our estimate of $255. Looking into 2026, we see brighter skies: improving GDP growth, a more accommodative Fed and greater clarity on tariffs and fiscal policy supports our 12-month S&P 500 target of 6,375.

The euro debuted in 1999 and at the time, it raised concerns about a serious challenge to the dollar’s dominance. Bringing together such a diverse group of economies proved difficult, and Europe has struggled to keep pace with US growth and competitiveness. Today, there’s a fresh wave of optimism in Europe – driven by increased defense spending and more flexible fiscal policies. We remain cautious and don’t believe that US exceptionalism is fading. Structural challenges in Europe persist, and while some expect a weaker dollar to boost international returns, we don’t see enough movement in currency markets to support that view. We continue to favor US equities, where the outlook is more stable and the path ahead is clearer.

Bottom line: Perspective is power

For investors, market ups and downs are nothing new. Despite interim setbacks, the S&P 500 has delivered a robust average annual return of ~11% since 1985. Bull markets historically last six times longer than bear markets and produce returns five times more powerful. The takeaway? Stay focused on the long term, stick to a well-balanced strategy and rely on your investment advisor. Looking back, it might seem like timing the market would’ve been easy – but markets move to their own rhythm. One thing is clear: Time in the market is far more powerful than trying to time it. We may not be able to predict the future, but we can prepare for it with discipline, perspective and some help from the lessons of the past.

Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the Raymond James Chief Investment Officer and are subject to change. There is no assurance the trends mentioned will continue or that the forecasts discussed will be realized. Past performance may not be indicative of future results. Economic and market conditions are subject to change. Diversification does not guarantee a profit nor protect against loss. The S&P 500 is an unmanaged index of 500 widely held stocks. An investment cannot be made in this index. The performance mentioned does not include fees and charges, which would reduce an investor’s returns. Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification. Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Investing in commodities is generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility. Investing in small-cap stocks generally involves greater risks, and therefore, may not be appropriate for every investor. The prices of small company stocks may be subject to more volatility than those of large company stocks.