By Jeff Powell
Elevage Partners CEO
How much is certainty worth to investors? Last week, we got an answer: about $2 trillion.
For months, markets climbed with almost no volatility. The S&P 500 had gone 119 trading days without even a 2% pullback (Source: J.P. Morgan, Oct. 2025). The VIX, the “fear index” that measures volatility, sat near historic lows.
Investors weren’t just confident — they were comfortable. Then at 10:57 a.m. Eastern Time on Friday, everything changed.
A Few Words, A Massive Reaction
President Donald Trump posted a 500-word message on Truth Social about rare earth metals and China. Buried in it was the line that mattered: “One of the policies we are calculating at this moment is a massive increase of tariffs on Chinese products…” (Source: CNBC, Oct. 11, 2025).
Markets instantly reversed.
- S&P 500: -2.7%, closing at 6,552.51
- Dow: -1.9% (-878 points)
- Nasdaq: -3.6% (Source: Yahoo Finance, Oct. 10, 2025)
Tech stocks — this year’s leaders — fell the hardest. In just hours, $2 trillion in market value vanished.
Why Tariffs Rattled the Market
On the surface, the topic was “rare earths,” materials few investors think about. But the deeper issue was dependence: China controls ~70% of global supply (Source: CNBC, Oct. 11, 2025). These metals are essential to semiconductors, electric vehicles and military technology. They are core to the modern economy.
The administration wants to rebuild U.S. manufacturing and reduce reliance on China. But tariffs hit the very industries America is trying to strengthen. Companies still need Chinese components. Higher tariffs don’t change supply chains overnight. They just make everything more expensive.
The question now: Will China retaliate, and how far could a trade war go?
The Warning Signs Were Already There
Ironically, last week began with optimism. But a few signals suggested something was off:
- Gold hit $4,000 per ounce for the first time ever — a classic fear signal (Source: CNBC, Oct. 7, 2025).
- The government shutdown entered week two, delaying the official jobs report.
- The Fed meets Oct. 28–29 — but will have no official labor data.
- Private payrolls posted their worst decline since March 2023.
- The ISM Services Index fell for the fourth straight month (Source: Nasdaq, Oct. 6, 2025).
Despite growing weakness, investors kept buying … until they didn’t.
Calm Hides Fragility
Friday’s plunge exposed what calm can conceal: When tech stocks fell, institutions sold everything else to raise cash. Selling became indiscriminate. One auto parts supplier bankruptcy rippled into the private credit market. Even speculative assets like small cryptocurrencies tumbled.
This is how contagion starts — not from one headline, but from stretched markets meeting sudden shock.
What We’re Watching
As we move through October, our investment committee will be focused on:
- Earnings and guidance: Results matter, but forward-looking commentary matters more.
- Fed communication: With missing data, tone and language will be closely read.
- Trade policy: Is the tariff threat real, or a negotiation tactic?
- Market internals: Which sectors hold up? Where does money rotate? That reveals risk appetite.
- Portfolio alignment: If Friday felt alarming, that’s useful information. It may signal a need to revisit allocations — not out of fear, but to ensure alignment with your goals and comfort with volatility.
And what does this mean for you? Markets are not machines. They are human behavior in motion, driven by hope, fear, confidence and reaction. For 119 days, calm made risk feel distant. Friday reminded us that certainty is an illusion.
At Elevage Partners, we don’t build portfolios on predictions. We build them on resilience. We manage risk before the turbulence, not after. We stay invested with discipline, not emotion. Because long-term success isn’t about avoiding every downturn — it’s about having a strategy that can weather them.
P.S. Some Lessons Don’t Expire
There’s a reason the fable of The Tortoise and the Hare has lasted since 1668, and is a favorite of our Chief Investment Officer, Thierry Hasse.
The hare is fast … and reactive. The tortoise is steady … and committed.
History has shown us that in markets, the tortoise wins. This is not, of course, because it moves the quickest, but rather, because it never abandons the path.
Last week reminded us:
- Calm doesn’t last forever.
- Neither does turbulence.
The investors who succeed aren’t the ones who predict the next tweet. They’re the ones who stay disciplined when it arrives.
At Elevage Partners, that’s the work we do every day.
The information contained herein represents the views of Elevage Partners at a specific point in time and is based on information believed to be reliable. No representation or warranty is made concerning the accuracy of any data compiled herein In addition, there can be no guarantee that any projection, forecast, or opinion in these materials will be realized. Any statement non-factual in nature constitutes only current opinion which is subject to change. These materials are provided for informational purposes only and do not constitute investment advice. Any reference to a security listed herein does not constitute a recommendation to buy, sell, or hold such security. Past performance is no guarantee of future results. The historical returns of any securities and/or sectors mentioned in this commentary are not necessarily indicative of their future performance.