Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
What to do? We are breaking a cardinal rule of our investment strategy, SELLING stocks, especially tech and small caps, to take our stock allocation BELOW the minimum % we believe one MUST keep in ANY LT investment strategy.
That's how FEARFUL the buffoon's fiscal policies are. That's how much worse we think it will get before it gets ANY better.
EDIT Disclaimer: All SELLs will be in IRAs and all positions being SOLD are UP 35%-95% ====================================
From The Barron's Daily
Trump Tariffs Are a Nightmare for Stock Markets. Next Quarter Could Be More Terrifying and 5 Other Things to Know Today.
At the end of the first quarter, the S&P 500 is reeling—don’t expect a March Madness-style comeback soon.
The benchmark index is on track for its worst quarter since 2022, largely driven by concerns about President Donald Trump’s tariff policy, and trading continued to be dismal on the final day. Things could get worse—White House advisors are considering tariffs of up to 20% on virtually all U.S. trading partners, according to The Wall Street Journal.
There remains some hope in the market that Wednesday’s “Liberation Day” tariff announcement could mark a turning point by removing the uncertainty. If the Friday jobs report continues to show a broadly healthy labor market and Tesla defies fears about its delivery figures on Wednesday, maybe sentiment could improve.
That’s likely too optimistic. Trump’s tariffs will likely spark retaliation from other countries and it’s hard to judge where an escalating trade war will end. The probability of a U.S. recession in the next 12 months has risen to 35% from 20%, according to Goldman Sachs, which also forecasts a 5% fall in the S&P 500 over the next three months.
When can investors hope to see light at the end of the tunnel? Probably not until the latter part of the year when it should become clear what the new base level of tariffs will be and the focus could shift to Trump’s planned tax cuts. By that point, the Federal Reserve could well be cutting interest rates, with the possibility of steeper reductions in reaction to any tariff-induced economic weakness.
There is still hope for a turnaround but without a buzzer-beating reversal from Trump, the second quarter could be tough to watch.
I think that the real liberation day will be when the two presidents are in handcuffed and on their way to prison. Until then my investment plan is not to lose money. Lots of safe 4% yield spots to stash our chips we can watch what’s going on in horror . I was a graduate student of history long ago and I often wonder how the history of 2025 will be written.
Stillers. That’s a great title for my future self’s dissertation. If History Departments still exist. Thanks for that. Until recently I wondered if I would outlive my money but now I wonder if I will outlive democracy? Warts and all,it wasn’t so bad.
IMHO the biggest problem is the uncertainty. What are the tariffs today? Wednesday? Next Tuesday? And because businesses cannot make long term capital allocation plans, this virtually guarantees that GDP will be below potential GDP. That's an argument against investing in stocks generally.
But some companies can benefit. The tariffs (whether actually imposed or not) have united Canadians in their opposition to buying US products (regardless of whether their governments officially boycott or tariff US goods). This bodes well for Canadian companies that sell domestically (i.e. to Canadians).
And as an added bonus - once Canada is incorporated into the US, the large US market will again be open to all those Canadian companies without foreign tariffs. Just a thought for those with a longer investment horizon
@LarryB, from a historical perspective, what's going to be absolutely galling is that FOTUS and his people will be crowing over the next year about how 'great' America is (or 'will be') during its 250th celebration, thumping their chests for the cameras and celebrating Americana with all sorts of faux patriotic events/spectacles -- all while doing their damnest to rip us apart at home, screw the citizenry (including their base), and turning the majority of the world against us. This won't be "fiddling while Rome burns" or Nero appointing his horse as consul-crazy ..... this is "getting the symphony drunk and then playing the show in front of opening night reviewers"-level of crazy, and then complaining when the reviews are harsh.
I'm not going entirely to cash, but I've been lightening a few positions in recent weeks to be able to buy other things that may go on 'deep' discount soon.
MSF. The 51st state will be massively BLUE! Why would he who can’t be named want to add the bluest state unless elections were a thing of the past? Unless he hasn’t thought it out.
MSF. The 51st state will be massively BLUE! Why would he who can’t be named want to add the bluest state unless elections were a thing of the past? Unless he hasn’t thought it out.
You think he THINKS of anything beyond his current conversation or tweet? He just ... does things, like a toddler with genetic impulse-control problems.
Stillers. That’s a great title for my future self’s dissertation. If History Departments still exist. Thanks for that. Until recently I wondered if I would outlive my money but now I wonder if I will outlive democracy? Warts and all,it wasn’t so bad.
Same wavelength here on our respective fears - we currently fear we won't outlive democracy far more than we fear we won't outlive our money, elimination of our future SS checks notwithstanding.
On a positive note, ultimately, things didn't work out so well for the last tariff czar McKinley, if you know what I mean!
FWIW, all SELLs (per above posts) have been entered today. Reduced stock exposure by ~50%. Parking proceeds in VMRXX, FZDXX and will likely BUY a coupla new rungs on 5-yr CDs ladder that virtually guarantees a net positive TR in 2025.
Kudos to @larryB for this thread. (Sadly) Timely and actionable.
EDIT: NOT saying this strategy is correct for anyone other than me and the missus. BUT, our #1 goal this year, after two monster stock gain years under a REAL president, was to NOT allow the buffoon's asinine fiscal policies (read, orange brain farts) to cause us to be anything but net positive for the year on 12/31/25. And that goal has virtually been guaranteed with these moves today. Plus, we will sleep MUCH better thru year-end!
At Stillers. Portfolio on safety but social security is not. The question is I ponder is when social security is disappeared do I become more or less aggressive to replace what covered 110% of our regular expenses? I am not investing for the next generation but likely for LTC …..
Excerpt (BOLD added): ... “Ultimately, you’re going to see the system collapse and an interruption of benefits,” O’Malley said. “I believe you will see that within the next 30 to 90 days.” ... For people who are already receiving Social Security benefits, most of that is automated and may not be affected, she said. However, processing new claims — whether it be for retirement or disability benefits — may take longer since those cannot be processed without Social Security employees, Hornick said.
IF they are affected, pretty sure There Will Be Blood.
Tick. Tick. Tick.
EDIT: An apparent afternoon (IMO) dead cat bounce, if it holds, will play nicely into the plans of anyone who is today running from this scary looking freight train.
Dumped TDS preferreds today to raise some extra cash. Preferred-wise, I'm only holding T preferreds now but I've been reducing that fairly large position in recent months as well.
Otherwise i'm about as streamlined as I care to make myself ahead of Tariff Baby's moves on Wed.
Of all the potential events, the one with the highest probability is a slowing economy (by design). I have to take the administration’s word on it. I have to give runaway inflation a lower probability. Pull forward of FF rate cuts are a higher probability. So, I would buy or sell based on the above thesis.
Edit: Stagflation is a word thrown around quite a bit in the media but I give it a very low probability so much that it does not feature in my list of worries.
FWIW, some believe we are already in or about to enter a period of stagflation with recession probabilities clearly spiking.
Components of stagflation and my 2 pennies: Slow growth - Financial firms have already cut their YE S&P projections based on slower growth. High unemployment - Coming back very soon to a country near us? Rising prices - A lot of wood was chopped on this one, but under the tariff czar, "It's all over now, baby blue?"
BTW, you kind of lost me with, "I have to take the administration’s word on it." No capisce.
No need to debate it any further. We will not know the effects of the tariffs for quite some time yet and will not know what conditions we actually experienced until we look back.
Stagflation refers to a scenario with a stagnant economy and high inflation. It is rare for both conditions to occur simultaneously. The best known example of stagflation in the U.S. is probably the 1970's oil crisis. Stagflation is not my "base case" but that doesn't mean it can't rear it's ugly head.
At Stillers. Thanks for the Dylan reference. I know some younger folks who have a big Lebowski reference for everything but for my money I will take Dylan. “. To each his own, it’s all unknown.”
At Stillers. Thanks for the Dylan reference. I know some younger folks who have a big Lebowski reference for everything but for my money I will take Dylan. “. To each his own, it’s all unknown.”
Not a huge Dylan fan, but if you ain't seen "A Complete Unknown," it's a gem!
Stagflation is the simultaneous appearance in an economy of slow growth, high unemployment, and rising prices.[My 2 pennies on each of the three components are in a prior post here]
Once thought by economists to be impossible, stagflation has occurred repeatedly in the developed world since the 1970s.
Policy solutions for slow growth tend to worsen inflation, and vice versa. That makes stagflation hard to fight. [And why, as noted in a prior linked article, the Fed hates it!]
Third world countries have a better experiential knowledge of stagflation. US had only two (non-consecutive) years in the 70s of stagflation. So, media talking about it more now is more out of fascination (not sure that is the right word but you get the idea).
Now that I had a chance to read the thread, I agree with the general sentiment - the world in turmoil. I get that evidence pointed to it before hand (i.e., not news) but that does not make it easy for people to stomach it or deal with it when the event arrives. The good news is humans are wired for optimism (which is also the cause for their undoing sometimes!).
@stillers, Disturbance, Detox, etc. are only some of the words used. Also, just knowing their priorities, an immediate vibrant economy is not a goal or a priority. Looking at human history with similar priorities also tells me the economy has to take a hit, which is why I gave this the highest probability. To keep this thread clean, I will stop here.
Comments
[perhaps to] Raise cash to buy quality stuff if/when it goes on deep sale?
Opportunistically speculate on some inverse ETFs via stock or stock options?
Oh no, wait...
Great post by @rforno.
What to do? We are breaking a cardinal rule of our investment strategy, SELLING stocks, especially tech and small caps, to take our stock allocation BELOW the minimum % we believe one MUST keep in ANY LT investment strategy.
That's how FEARFUL the buffoon's fiscal policies are.
That's how much worse we think it will get before it gets ANY better.
EDIT
Disclaimer: All SELLs will be in IRAs and all positions being SOLD are UP 35%-95%
====================================
From The Barron's Daily
Trump Tariffs Are a Nightmare for Stock Markets. Next Quarter Could Be More Terrifying and 5 Other Things to Know Today.
At the end of the first quarter, the S&P 500 is reeling—don’t expect a March Madness-style comeback soon.
The benchmark index is on track for its worst quarter since 2022, largely driven by concerns about President Donald Trump’s tariff policy, and trading continued to be dismal on the final day. Things could get worse—White House advisors are considering tariffs of up to 20% on virtually all U.S. trading partners, according to The Wall Street Journal.
There remains some hope in the market that Wednesday’s “Liberation Day” tariff announcement could mark a turning point by removing the uncertainty. If the Friday jobs report continues to show a broadly healthy labor market and Tesla defies fears about its delivery figures on Wednesday, maybe sentiment could improve.
That’s likely too optimistic. Trump’s tariffs will likely spark retaliation from other countries and it’s hard to judge where an escalating trade war will end. The probability of a U.S. recession in the next 12 months has risen to 35% from 20%, according to Goldman Sachs, which also forecasts a 5% fall in the S&P 500 over the next three months.
When can investors hope to see light at the end of the tunnel? Probably not until the latter part of the year when it should become clear what the new base level of tariffs will be and the focus could shift to Trump’s planned tax cuts. By that point, the Federal Reserve could well be cutting interest rates, with the possibility of steeper reductions in reaction to any tariff-induced economic weakness.
There is still hope for a turnaround but without a buzzer-beating reversal from Trump, the second quarter could be tough to watch.
The buffoon will only remove/reduce the tariffs IF he can, in his f*cked up mind at least, reasonably declare victory.
Us? It's a fiscal policy freight train being driven by a mad man. Time to get the f*ck outta the way.
Disclaimer: All SELLs will be in IRAs and all positions being SOLD are UP 35%-95%.
But some companies can benefit. The tariffs (whether actually imposed or not) have united Canadians in their opposition to buying US products (regardless of whether their governments officially boycott or tariff US goods). This bodes well for Canadian companies that sell domestically (i.e. to Canadians).
https://ca.style.yahoo.com/trumps-unjustified-25-tariffs-have-begun-heres-how-to-buy-canadian-during-a-trade-war-list-of-canadian-brands-to-shop-144356266.html
And as an added bonus - once Canada is incorporated into the US, the large US market will again be open to all those Canadian companies without foreign tariffs. Just a thought for those with a longer investment horizon
@LarryB, from a historical perspective, what's going to be absolutely galling is that FOTUS and his people will be crowing over the next year about how 'great' America is (or 'will be') during its 250th celebration, thumping their chests for the cameras and celebrating Americana with all sorts of faux patriotic events/spectacles -- all while doing their damnest to rip us apart at home, screw the citizenry (including their base), and turning the majority of the world against us. This won't be "fiddling while Rome burns" or Nero appointing his horse as consul-crazy ..... this is "getting the symphony drunk and then playing the show in front of opening night reviewers"-level of crazy, and then complaining when the reviews are harsh.
I'm not going entirely to cash, but I've been lightening a few positions in recent weeks to be able to buy other things that may go on 'deep' discount soon.
On a positive note, ultimately, things didn't work out so well for the last tariff czar McKinley, if you know what I mean!
He didn't get to run for a third term either?
Reduced stock exposure by ~50%.
Parking proceeds in VMRXX, FZDXX and will likely BUY a coupla new rungs on 5-yr CDs ladder that virtually guarantees a net positive TR in 2025.
Kudos to @larryB for this thread.
(Sadly) Timely and actionable.
EDIT: NOT saying this strategy is correct for anyone other than me and the missus.
BUT, our #1 goal this year, after two monster stock gain years under a REAL president, was to NOT allow the buffoon's asinine fiscal policies (read, orange brain farts) to cause us to be anything but net positive for the year on 12/31/25. And that goal has virtually been guaranteed with these moves today. Plus, we will sleep MUCH better thru year-end!
From March 1, 2025:
https://www.cnbc.com/2025/03/01/doge-actions-may-cause-social-security-benefit-interruption-ex-agency-head.html
Excerpt (BOLD added):
...
“Ultimately, you’re going to see the system collapse and an interruption of benefits,” O’Malley said. “I believe you will see that within the next 30 to 90 days.”
...
For people who are already receiving Social Security benefits, most of that is automated and may not be affected, she said. However, processing new claims — whether it be for retirement or disability benefits — may take longer since those cannot be processed without Social Security employees, Hornick said.
IF they are affected, pretty sure There Will Be Blood.
Tick. Tick. Tick.
EDIT: An apparent afternoon (IMO) dead cat bounce, if it holds, will play nicely into the plans of anyone who is today running from this scary looking freight train.
Dumped TDS preferreds today to raise some extra cash. Preferred-wise, I'm only holding T preferreds now but I've been reducing that fairly large position in recent months as well.
Otherwise i'm about as streamlined as I care to make myself ahead of Tariff Baby's moves on Wed.
Edit: Stagflation is a word thrown around quite a bit in the media but I give it a very low probability so much that it does not feature in my list of worries.
FWIW, some believe we are already in or about to enter a period of stagflation with recession probabilities clearly spiking.
Components of stagflation and my 2 pennies:
Slow growth - Financial firms have already cut their YE S&P projections based on slower growth.
High unemployment - Coming back very soon to a country near us?
Rising prices - A lot of wood was chopped on this one, but under the tariff czar,
"It's all over now, baby blue?"
https://www.reuters.com/markets/us/stagflation-radar-us-economy-no-repeat-70s-2025-03-25/
BTW, you kind of lost me with, "I have to take the administration’s word on it."
No capisce.
No need to debate it any further. We will not know the effects of the tariffs for quite some time yet and will not know what conditions we actually experienced until we look back.
It is rare for both conditions to occur simultaneously.
The best known example of stagflation in the U.S. is probably the 1970's oil crisis.
Stagflation is not my "base case" but that doesn't mean it can't rear it's ugly head.
https://www.investopedia.com/terms/s/stagflation.asp
Excerpt (BOLD added):
Key Takeaways
Stagflation is the simultaneous appearance in an economy of slow growth, high unemployment, and rising prices. [My 2 pennies on each of the three components are in a prior post here]
Once thought by economists to be impossible, stagflation has occurred repeatedly in the developed world since the 1970s.
Policy solutions for slow growth tend to worsen inflation, and vice versa. That makes stagflation hard to fight. [And why, as noted in a prior linked article, the Fed hates it!]
Third world countries have a better experiential knowledge of stagflation. US had only two (non-consecutive) years in the 70s of stagflation. So, media talking about it more now is more out of fascination (not sure that is the right word but you get the idea).
Now that I had a chance to read the thread, I agree with the general sentiment - the world in turmoil. I get that evidence pointed to it before hand (i.e., not news) but that does not make it easy for people to stomach it or deal with it when the event arrives. The good news is humans are wired for optimism (which is also the cause for their undoing sometimes!).
@stillers, Disturbance, Detox, etc. are only some of the words used. Also, just knowing their priorities, an immediate vibrant economy is not a goal or a priority. Looking at human history with similar priorities also tells me the economy has to take a hit, which is why I gave this the highest probability. To keep this thread clean, I will stop here.