As I suspected might happen tariffs on Mexico have been ‘paused’ for at least a month. When the word got out at about 9:30 a.m. central the S&P500 went straight up 1.50% in about 20-30 minutes. Nothing has changed for Canada and China–although I highly suspect Canada may fall into line with Trumps wishes and have the tariffs also paused–we’ll see.
The uncertainty of what comes next is going to live with the markets pretty much all week long. One just can’t predict what this administration will do next–and markets hate uncertainty. We are going to be doing a lot of guessing for months to come.
I was rather shocked to see all of our accounts up–even in the depths of the equity sell-off. Fortunately markets didn’t drive interest rates higher on inflation possibilities—I thought they might and that could have been painful.
While it is a dangerous time to be investing in anything–one has to keep hunting for things to buy–or do you want to settle on a 4.2% return from CDs and money markets? 4.2% isn’t terrible for sure–but one can do a bit better without going crazy–of course that is assuming that we have seen the peak in interest rates (the 10 year high was around 4.8%) and this is impossible to predict.
I think what the administration will do and is doing is exactly what was said throughout the long presidential campaign they would do. What markets will do in the short term is and always has been unpredictable, churning over the news of the day included. However the direction of broad equity indexes over long periods of time is much more predictable; they will go up.
Bogle and others believed market dividend yield, inflation, GDP or dividend or earnings growth, along with PE expansion or retraction comprised the main elements of nominal market growth. As aside, I rather have market whip around news vs. a true bubble such as 2001 Nasdaq craze, or the subprime disaster of 2008. which led to trough of roughly a 54% decline in March 2009.
I feel like my portfolio is built for market turmoil. It’s a good thing because that is the way I built it.
I am a poor trader. Mine is built more for a buy/hold environment or one when changes are occurring, it is not rapid fire. The 1st Trump administration hurt me because he is a transactional person. Iām more prepared for the 2nd time but I will always choose predictable as my preference. If you are skilled at trading you should do very well.
SteveA, Being as honest as can be; I seriously have never known the market to be predictable. If it was we’d all have no need to be conversing on Tim’s site. Real money is made when consensus-life is put away for awhile yes, I believe you there, but I find it next to impossible to predict anything. This is why my philosophy is to buy and sell through any market conditions. Keep your fundamentals close to your heart (and head) and you will win out in the end. Keep your bond picks coming, I really enjoy them and its helped me greatly out of a few jams.
I agree with you, but it has never been the norm that announced tariffs come and go in 1 day. That is what I mean by rapid-fire changes. In the past, these type of issues were resolved in phone calls between leaders first. It is what it is.
Agree completely, you cannot predict what this administration will do next. I believe the “markets hate uncertainty” is just a clique. I see wild swings in the cards, but when the administration is unpredictable, anything can happen. Back to watching daily.
Frankly, a crappy way to spend my retirement but it is what it is. I am sure some people will find it exciting times.
I started toeing back into CCIA and LBRDP in a small way after picking up about a buck/share selling them during their little spikes last month.
Not in a hurry to get all the way back in, but getting started.