To Panic or Not To Panic
Welcome to the Schmoozeletter Blog. Your source for weekly water cooler wisecracks from the world of finance. If you have an opinion different than mine or a topic you want to hear about, let me know!
This week, Mr. Market gets liberated. American Liberation Day! Woohoo! Do you feel better now that we’ve cranked the liberty meter up to 11?
I guess that means liberating your portfolio from any profits you may have had.
Mr. Market is in full-on panic selling mode with the Trump Tariffs causing a brutal collapse. Investors are finding out that simply saying you are pro-business, or that your party is better for the economy, doesn’t actually make it true.
So let’s take a look at what is going on and decide:
To Panic or Not To Panic
The rules are simple: I’ll give you a scenario, and we will decide whether we should panic (sell) or not.
Leaking War Plans to the Press
This is a colossal organizational failure that, in any other organization, would lead to heads rolling. These actions typically would be the end of careers and potentially prison time, but this is the Trump administration. So: no consequences. No repercussions. No admissions of guilt. Just another day.
What should we do?
PANIC.
S&P 500 Bloody Week
Yikes.
But it is important to zoom out and keep the big picture in mind. No twenty-year period in market history has ever lost money, as the MSFTs and GOOGs of the world will keep bringing in profits despite Donny’s unnecessary government regulation.
Stay the course. Keep dollar-cost averaging. Keep a long-term focus.
What should a long-term investor do?
DON’T PANIC.
Trump Angling for Third Term
Things are going so well in his first few months of this term that he’s already talking about the next term. Not sure why anyone would assume he’s joking after the last time he was told to leave the White House.
The Market-Collapser-in-Chief says he’s not giving up power.
What should we do?
PANIC.
SCHD Down 9% This Week
The best dividend growth ETF is down nearly double digits with the rest of the market in response to Trump’s genius economic policy.
“Be greedy when others are fearful,” Warren says. When fantastic assets are on sale, that is the time to buy. With a yield over 4%, this is an incredible time to scoop it up and let that snowball roll for the rest of your life.
What should we do?
DON’T PANIC.
Trump Teases War
Trump has talked relentlessly about annexing Canada and taking over Greenland.
Uh, so that is war. That is an act of war. The president is just openly talking about war with peaceful nations.
But this is a funny haha newsletter.
War joke.
What should we do?
PANIC.
GOOG Under $150 Per Share
Big Tech is getting slammed with the rest of the market. Google is now so cheap it has roughly the same multiple as AT&T.
Which of these companies would you rather have?
In my opinion, GOOG is the best buy on the market right now. Buy, hold until we don’t have a lunatic as president, profit.
What should we do?
DON’T PANIC.
Trump Tariff Calculations
Feeling liberated, baby?!
Trump unveiled the six tiny poster boards of death on Wednesday, and the grand plan for reciprocal tariffs was revealed.
“Reciprocal” is an interesting way to describe them.
Reciprocal makes it seem like other countries are tariffing U.S. goods. It makes it seem like if they lower their fee, we will lower ours. It makes it seem like there is some give and take. Something they can do. Something to negotiate.
Nope.
It is just the trade deficit. If we import more goods from a country than we export, they get a high tariff. If not, it’s ten percent.
No incentive for countries to work with us. Nothing to negotiate. Nothing to change.
Just totally ignoring basic economics—that wealthier countries import more goods from less wealthy countries.
Something tells me Vietnam isn’t going to suddenly start purchasing enough U.S.-made Rogue barbells at $500 a pop to swing that 90% trade deficit the other direction.
Just another incredibly well-thought-out policy decision.
What should we do?
PANIC.
The Long-Term Health of the U.S. Economy
Things look bleak right now. We have a madman at the helm who has never been told no, never faced any consequences for his actions, and has switched his narrative from an economic policy bringing in a “golden age” to an “adjustment period.”
The worst thing to do for your portfolio would be to panic-sell when you’re planning to hold for the long term. But maybe the worst thing to do for America is to continue to ignore the lunacy and incompetence coming out of the White House these days.
What should we do?
DON’T PANIC.
Final Thought
“Under my plan, incomes will skyrocket, inflation will vanish completely, jobs will come roaring back, and the middle class will prosper like never before.” — Donald Trump, July 2024
