5 reasons to invest during the current tariff uncertainty!
As Friday, April 4th comes to a close, the stock market is taking one of the largest tumbles in recent history, and the key driver is the uncertainties of the Trump tariffs. A handful of friends have asked me if I am still investing during all the uncertainties? My response is “hell yeah, I’m buying!”
If you are like many of my friends and family, you are probably asking why would I want to invest with all the uncertainty and turmoil. I have a handful of reasons why Friday was a great day to sink some money into my favorite investments. Buckle up while I list my top 5 reasons why now is a great time to invest.
Trump declares “Liberation Day” with a new tariff plan.
Reason 1: I am investing in the strength of the United States of America! The U.S. stock market has come out on the positive side of 2 world wars, multiple other conflicts like Vietnam and the Gulf war, the 1929 Crash, the Cuban missile crisis, the Kennedy assassination, the attempted Reagan assassination, Black Monday, the Sept 11th attacks, the Dot.com bubble, the 2008 Great Recession, the sub-prime mortgage crisis, Covid-19 and so much more. I’m fairly certain that we will survive a political pissing match over tariffs.
Reason 2: Many people say that they have lost a lot of money over the last couple days. That answer is wrong, unless they sold. I haven’t lost a dime. Since I have zero intention of selling any of my investments until after 2030, I haven’t lost anything. I view the dip as an opportunity to buy the same investments I was going to buy anyway, at a deep discount. The only thing that matters in the end, is the price at which I sell when I’m ready to retire. Until then, everything is just an opportunity to buy at a new price. The most successful investors don’t look at a dip as a negative event. Smart investors know that dips happen and they are, in fact, a healthy part of the stock market.
Reason 3: With technology becoming more capable every day, software algorithms are driving both ‘euphoric buying’ and ‘panic selling’ to extremes. Computers are setting off triggers with zero human thought about what circumstances are driving prices. These predetermined triggers exacerbate the desire for the uninformed investor to do the opposite of what they should. Some of the best investors that ever existed have often articulated that “when in doubt, do nothing!”, meaning that the best course of action is just to wait it out. Algorithms helped drive massive selling, and algorithms will help push the stock market back up just as quick.
Reason 4: I keep my investments to just a handful of picks that I expect to perform over a 5 year, 10 year and 20 year period and I know what they are worth. Knowing the worth of a stock is extremely valuable because you know when you are paying too much for a stock and you also know when the price of that stock is a bargain. The stock market has a tendency to behave very irrationally for undetermined periods of time. Irrational behavior in the stock market can last days, weeks, months or even years. Nobody knows how long each one will stick around. Those periods of irrationality are the best times to buy your favorite investments. Today, April 4th, is one of those days of irrationality that the savvy investors took advantage of. If the stock market continues to behave irrationally, smart money will continue to invest during this downturn because the upturn always comes.
Reason 5: No matter what you hear on the news, nobody really knows what will happen with the tariff situation. There are so many “what if” scenarios being floated and even if you are part of Trump’s inner circle, you still don’t know how this will end up. The world economy has an uncanny way of swinging back & forth and then settling back into some resemblance of balance after turbulent events. Just look at the history of the stock market. Downturns can occasionally last a couple years, but most of the time they only last an average of 8 months. 8 months is a short time to wait if you are investing for a retirement or other event that is 10 years or more away (several examples can be picked out in the chart below, which shows 30 years of returns of the S&P 500).
30 years of returns from the S&P 500 - “When in doubt, zoom out” to get better perspective.
History has proven over and over that when it comes to investing, fortunes are made when everyone else is panicking, as long as you choose solid investments that carry little debt to be able to weather a storm, like the tariff situation we are seeing today. As much as it may seem like the tariff situation is a catastrophic event, it will most likely end up just a blip on the radar of the US stock market’s march forward and upward.
Sure, taxes could look different. Tariffs could change dynamics on the world stage until every country adjusts, but every country WILL ADJUST and settle into whatever structure materializes from Trump’s recent tariff policy announcement. After all, the United States is the largest “consumer economy” in the world, and world leaders electing to not trade with the U.S. will inflict more pain back in their home country, which will ultimately result in political turmoil at home. No politician wants to self-inflict political pain when all they have to do is give Trump what he ultimately craves most: to negotiate “a deal”.
Do you think the tariff situation will last a long time, or will it resolve in a short period of time? Let us know your thoughts in the comments section, and save our website to your favorites, as we will continue adding more content each week.
