The Tariff Tantrum
Posted by John Posey
In light of the market’s recent volatility, I wanted to reaffirm some investment principles that I believe will serve you well. As we have been witnessing the latest market movements, Trump’s tariff policies seem to be causing the market to price in future inflation and economic decline to follow, which very well may occur. However, regardless of your personal view on the merit of tariffs, it would be quite an undisciplined investment policy to react to such political tactics with abrupt changes in investment strategy and allocation.
The undisciplined investor will often react to such recent events by selling a portion or all of their stock holdings in efforts to avoid or conserve values against future potential loss which just happens to be the simplest way to make temporary losses permanent that I know of. This kind of approach is one of the most effective get-poor-quick schemes there is.
Although tariffs may prove to have an impact on our financial lives, they certainly do not fall into a category that we can control. It is only at the intersection of what matters AND what we can control where we can focus our energy in a way that is actually worthwhile. And while we can control how we are invested, it rarely, if ever is in our benefit to make adjustments to conserve value in reaction to external market events - events that are not uniquely specific to our individual circumstances.
On the contrary, considering investing cash in equities during uncertain times can offer long-term investors some of the best buying opportunities they’ll see in their lifetimes. Interestingly enough, some of the best purchases I’ve experienced came at a time when I had little to zero confidence the timing was ideal – it often felt like the worst could be yet to come but I invested anyway like a true madman! It never seems to feel particularly wise to invest while the market is in a panicked freefall but ironically that’s where the best opportunities are commonly found. And just like in horseshoes and hand grenades, close counts – just don’t expect to catch the rock bottom price because you likely never will. Just getting close can provide some of the best results you could ever hope for.
As the tariff tactics evolve, I encourage you to avoid the crowd having a tantrum. Staying true to a disciplined and evidence-based investment strategy is simply the most prudent path now and always.
Advisory services offered through Plains Advisory LLC, an investment adviser registered with the State of Nebraska. Insurance products and services are offered and sold separately through John Posey, a licensed insurance agent. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.
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