Last weekend, Donald Trump posted a Truth Social message that was, even by his standards, aggressive. The tone and language pointed toward a potential worst-case scenario — the kind of headline that would normally rattle markets.

If you were reacting purely to that, you might have expected a sharp selloff when markets opened on Monday.

And initially, that’s exactly what happened.

Markets opened the week significantly down — first in Asia, then in North America. But as the day went on, something important happened: they recovered… and actually finished positive.

That’s often a signal.

As a portfolio manager, when markets absorb bad news and move higher, it usually tells you one of two things:

• The situation may not be as bad as feared

• Or a resolution (or improvement) is more likely than headlines suggest

Sure enough, shortly after, an announcement was made. Markets moved higher — and continued to rally through the rest of the week.

It’s a great reminder: markets often know more than the headlines.

Markets don’t wait for certainty

This is exactly why we don’t try to “guess” outcomes or time entries and exits around events like this.

To successfully time markets, you have to be right twice:

• When to sell

• When to buy back in

That’s incredibly difficult — especially when outcomes are uncertain and can resolve quickly.

Selling is usually the easier decision. And in moments, it can even feel good. If someone reacted emotionally to headlines and sold early, they may have felt validated as markets initially moved lower.

But that’s the easy part.

The hard part is getting back in.

Because the bottom doesn’t come with a signal — it often happens when fear is at its peak. The same investor who sold out due to uncertainty or fear likely wouldn’t have been in a buying mindset after seeing an aggressive post from Donald Trump. In fact, that’s usually when investors feel the least comfortable stepping back in.

And yet, that’s often when markets turn.

What typically happens is this: investors sell, feel good as markets drop, but then the recovery comes faster than expected. They hesitate, wait for more clarity, and end up missing the rebound — often buying back in at higher prices.

That’s why market timing is so difficult. It goes against human nature. It requires making calm, rational decisions in moments that feel anything but calm.

When short-term emotions override long-term plans, that’s when investors get derailed.

We’ve seen this pattern repeatedly:

• COVID

• The Ukraine war

• Various geopolitical conflicts

Markets typically recover well before there is any real resolution. 

They don’t wait for good news — often, less bad news is enough.

What actually matters to markets

Markets don’t need perfect outcomes. They need improvement and clarity.

For example:

• Will oil and goods flow more freely through the Strait of Hormuz than at the peak of tensions? Likely yes.

• Will things be fully back to normal? Probably not.

But that’s enough.

The global economy adapts, and markets adjust accordingly. That’s what we’re seeing now.

While oil flows and shipping haven’t fully normalized, conditions are improving at the margin — and that’s typically when markets bottom.

Inflation remains under control

Despite the spike in energy prices:

• Core inflation remains well behaved

• The overall impact has been less severe than feared

That reduces pressure on central banks and supports both stocks and bonds.

Geopolitics: still messy, but improving

The situation remains fluid, but:

• Ceasefire dynamics are fragile but progressing

• Oil continues to move

• Long-term supply disruption remains unlikely

This looks more like a temporary disruption, not a structural shift.

Where the opportunities are shifting

One clear theme emerging:

AI, energy, and infrastructure are becoming increasingly interconnected.

Areas of strength:

• Energy and electricity (powering AI demand)

• Semiconductors and hardware

• AI infrastructure

More cautious:

• Software, where AI disruption is creating uncertainty

If this trend continues

• Stocks could continue to recover (particularly tech, industrials, and consumer sectors)

• Bonds may benefit as inflation stabilizes

• The US dollar could weaken modestly

• Commodities like gold and copper may see moderate rebounds

Bottom line

This past week was a textbook example of how markets behave:

• Headlines looked alarming

• Markets sold off briefly

• Then recovered quickly — before any clear resolution

That’s not unusual — it’s how markets work.