Over the weekend and early on Monday, we received a flurry of messages from our clients – “What’s happening? Should we do something?” Briefly: While we certainly recognize and understand the concerns about what’s going on, we think it wise to exercise caution with respect to our clients’ portfolios right now. When the markets give and take a month’s worth of volatility and returns in just a few hours, it can make for a long day for those of us responsible for the success of our long-term investment strategies. It’s worth taking a moment to review where we are, how we got here, and where we’re going next.
The “Liberation Day” tariffs announced on Wednesday afternoon, April 2nd, were deeper and broader than most market gurus expected and sent markets spiraling on Thursday and Friday. The apparent lack of deep thinking behind the calculations of the “reciprocal” tariffs showed us that while there might be a careful plan in place to use these tariffs to re-set the global economic system, it’s more likely that mere whims are driving global economic policy for the United States. And, at the same time, it appears that there is a concerted effort to stoke fears among the American people, in order to … well, it’s hard to say.
A few weeks ago (as Robert Reich has pointed out), the economy that Biden supported was working pretty well, supporting low unemployment, high and rising wages for workers, lowered inflation pressures, and new all-time highs in the stock market. But suddenly the narrative has shifted, and talk of tariffs has taken over – and tariffs, when combined with other policies espoused by the current administration, will almost certainly cause economic harm: raise inflation, stifle wage growth, and increase unemployment. We’re told that those things will be temporary, while America is making our collective way to a new “Golden Age” of prosperity, but it’s hard to see how that might work.
If thoughtlessness and whim are controlling economic and trade policy today, then it would seem that this is a moment for us to be cautiously deliberate about our decisions about our portfolios, and rationally disciplined about the strategic actions we consider. In times of great volatility, the most prudent course of action we can recommend to most clients is to resist the urge to make impulsive changes to long-term plans in the face of short-term uncertainty. Of course, if your financial situation has changed significantly in recent months, and you think you need to make substantial changes to your investment plans as a result, please do contact your advisor – we will happily work with you to make prudent adjustments.
Sticking with our current strategy means that we reinforce our support for “the Resistance” in two ways: first, we decline to sell our assets to the broligarchs who appear to be running this show, and second, we continue to use our invested assets to make the world a better place in the future. And we might adopt an ancient Stoic philosopher’s stance: we can’t control the policies of the politically powerful, but we certainly can control our emotional responses and the actions we take. We can choose reaction to the Administration’s provocations in the panicked way that serves their interests alone, or we can choose positive action in the calm, deliberate, and disciplined way that supports our long-term investment strategies and our social, ethical, and political commitments.
It’s up to us to make the choice.
