The tariffs were higher and more sweeping than any economists forecasted.
Mr. Market has an ability like no other to adjust. The only thing he can’t adjust to is uncertainty.
So even if the “certainty” is worse than anyone expected, he can now start to adjust.
That means whatever fallout happens over the short-term will probably be the worst it will get.
Gazing into my crystal ball, we’ll probably have a sharp downturn over the short-term that will level off over the next few months, and then it’ll be a slow, steady climb higher.
If these tariffs actually ARE a negotiating strategy, and they ease up even a little bit, Mr. Market is going be very excited and we’d probably see an sharp upturn in lockstep with tariff easing.
(Which is why we’re not selling. Mr. Market has a looong history of making an about-face faster than any of us can react.)
If he makes an about-face, that’s actually worst case scenario for your money.
Why would an immediate market recovery be BAD?
Because if you’re reading this, then you’re likely in the accumulation phase of your financial life.
That means, you’re adding more and more shares to your portfolio every year. So the cheaper those shares are, the more you can buy.
For instance, if your $23,500 401k contribution last year bought 1000 shares, this year it could buy 1200 shares instead.
Same price, but more shares.
The BEST scenario is that Mr. Market throws a hissy fit and then pouts in the corner for a nice, long time.
That would give us lots of time to earn more paychecks and therefore invest more money (and buy more shares).
The first step towards recovery (even if it’s initially backwards) starts with certainty. Even if that certainty kinda sucks.
