Note: This is an article about the economic and stock market impact of the recent tariffs introduced by the United States government. The information and opinions have nothing to do with politics. There are many outlets that you can turn to for that. I hope to provide more depth to the financial impacts beyond the headlines – something missing from the discussion.
The stock market obviously did not like the Administration’s new tariff plan. The market has been drifting lower in anticipation of the new tariffs, but it really cratered yesterday after the plan was unveiled.
What might happen next in the stock market?
I believe the short-term future for stocks is dependent upon the real game plan for the Administration. Nobody outside the Administration knows their ultimate objectives but there are only two possibilities. One scenario could lead to good outcomes and the other could be bad.
Better scenario – This is just a negotiating tactic by the Administration to get better trade deals for the United States. This has been the pattern for this Administration in the past and the announcement yesterday used the phrase “open up markets overseas for US made products.” Opening up foreign markets to US products only happens with more favorable export terms for the US. Under this scenario, the tariffs will only be in place temporarily – until better trade terms can be negotiated.
Bad news scenario – The Administration is adding new tariffs to increase manufacturing activity in the United States and to bring back manufacturing jobs. If this is the case, the Administration plans on keeping these tariffs in place for the long-term. In the announcement, the Administration mentioned “bringing back manufacturing jobs in the US.
I say that possibility number 2 is a bad news scenario because economic history is very clear on this topic. These new tariffs will lead to:
Higher inflation – This would be bad because inflation had been dropping to more acceptable levels and higher prices could lead to less economic activity.
Retaliation – If the tariffs are to remain in place for the long-term, other countries will raise tariffs on US goods exported to those countries. This could lead to a spiral down in global economic activity.
Things could get really bad under scenario number 2. The US and global economies would likely fall into recession and stagflation would become a possibility. Under scenario 2, the stock market could fall significantly more.
MY GUESS
I have to believe that the Administration’s goal is Scenario number 1 – a negotiating tactic. I can’t believe that the Administration really believes that using tariffs to bring back manufacturing could work. The economic pain would be extreme if the tariffs stay in place for a long time.
Even if they are following Scenario 2, I believe the administration will be forced to back off most of the tariffs. As long as they get a few wins with some trade deals, they can claim victory and begin lowering the tariffs.
Unfortunately, I also think that the strength of the US’s negotiating position is going to decline over time. When the economy begins to decline and the stock market continues to fall, other countries will call the bluff.
WHAT TO DO
If you don’t have a disciplined system in place to avoid getting crushed in stock market meltdowns, now would be a good time to sign up for our Market Signals newsletter. The current decline could turn into one of those ugly and devastating bear markets.
Our Market Signals customers got out of the stock market four weeks ago. Our average customer has avoided $40,000 in losses over the last month. Our average customer also gained over $450,000 by using our system in 2023 and 2024. The service only costs $39.95 per month. I would say that is a pretty good return on investment.
You can sign up now by CLICKING HERE and get the peace of mind of having your life savings protected against the potential of additional losses.
There is a better way to invest.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
Investing is hard. Investing is frustrating. Investing is even more difficult when fear guides your investment decisions.
If you are in retirement or near retirement, you know that stock market declines can change your financial future significantly. Yet, you also need to generate high investment returns to support your income in retirement.
The risk of stock market meltdowns is the price of admission for investors. No one ever knows the timing or the magnitude of recessions or bear markets, but you know they will happen at some point. Those risks are ever present even if they don’t happen very often.
How you deal with the fear of investing in the stock market is one of the biggest determinants of your success. Fear and greed cause most people to make poor decisions.
Guessing at what is going to happen or listening to someone predicting what is going to happen rarely works out. Even if you get lucky and reduce your stock exposure at the right time, you will lose because you won’t get back into stocks at the right time.
Holding bonds in your portfolio is not the answer either despite what the industry professionals say. The data is very clear on this. Bonds will only drag down the investment returns of your portfolio and they don’t always provide downside protection. Bonds lost as much as stocks in 2022 and they have still not recovered three years later.
Holding different kinds of stock market investments won’t protect you. When the broad stock market declines it affects all stock investments. Small cap, mid cap and international stocks all take a hit.
The investment industry’s only solution to this problem is the tired, old Buy & Hold strategy. They tell you to just “ride it out”. They are correct when they say stocks will recover, but sometimes that can take seven year or more. And watching your life savings get cut in half is painful. And older investors don’t always have time on their side.
What is one to do?
The right way to handle this challenge is having a proven strategy and a disciplined process to investing.
This is why I created the Beyond Buy & Hold system.
The best investors have a disciplined approach to owning the best funds and a proven quantitative system to avoid the worst of bear markets. Our MARKET SIGNALS investing tool gives investors just that. It puts the odds in your favor. It captures the large stock market gains in up markets and protects your savings in down markets.
The stock market is in an uptrend 85% of the time, growing at double digit rates. You want to be aggressively invested (100%) most of the time. Our customers generated huge returns in 2023 and 2024 as the S&P gained 53% over those two years. Our customers were fully invested in the S&P 500 96% of that time. 50% growth over two years dramatically improves your retirement fund.
Having a proven system to sidestep the bear market crashes gives investors the confidence to invest aggressively in the stock market. Our customers are not worried about the current stock market volatility because they are already protected against big losses in ugly bear markets. We began moving money out of stocks in early March.
You don’t have to worry when you know you have a system to avoid the damage caused by bear market crashes. Imagine investing in total confidence and without fear of the next market collapse.
If you want to learn more about Market Signals, click the link below to get a copy of a free pdf that explains how Market Signals works and why it is a better way to invest your retirement savings.
You have nothing to lose and potentially millions to gain.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
The stock market made a strong reversal since my last update in February. Since my last report as of February 14th, the S&P 500 has dropped 7.7%, the Nasdaq has dropped 11.3% and the Russell 2000 has declined by 10.2%.
The chart below shows us how all three indices have performed since the beginning of 2024. The S&P 500 and the Nasdaq are now both 18% above their levels at the beginning of 2024. The Russell 2000 (small cap) has given back all the gains it made in 2024 and is now only 1% higher than it was at the beginning of 2024.
The uncertain tariff situation has been the biggest factor this year. Economic data is showing signs of softening, but the overall data has remained pretty strong. The most recent inflation report was encouraging but the market is concerned about future inflation due to tariffs. If tariffs lead to a recession, the stock market will see further declines. It is difficult to predict what the White House will do at the moment but the administration seems to be committed to tariff increases.
Volatility is higher than normal which we have been expecting. In the last three weeks, the S&P 500 has moved up or down by over 1.2% on average each day. In the last three weeks, the S&P has had seven days where the index declined by more than 1% and three days where it increased by over 1%. This is a sign of extreme volatility.
If your life savings is not protected against major market declines and volatility, now would be a good time to sign up for our Market Signals investment system. Click here to learn more.
The overvalued stock market situation has changed due to the recent market declines. Our stock market valuation indicator currently has the S&P 500 overvalued by about 10%. Last month, the number was 18%. If corporate profit growth accelerates, valuations will return to more normal levels. Any bad news about corporate earnings will lead to decreasing stock prices. Earnings growth expectations for 2025 are above average.
We will continue to ignore our emotions and stick to what our models are telling us. You, too, should stay disciplined and follow your long-term strategy despite the recent volatility.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
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