Only the most astute short-term traders can do well in wild markets; ordinary investors need to keep calm and ignore all the headlines and price gyrations.
Markets dislike uncertainty, and the new global tariff wars are creating an inordinate amount of uncertainty, hence the large decline in asset prices this past week.
Rest assured, the powers that be around the world are all paying very close attention to the current market turmoil, and it will not be long before negotiations create some resolutions, one way or another. The specific outcomes of those negotiations don’t really matter when it comes to tempering market volatility, what actually matters is that there is an outcome. Once the ground rules are laid out, markets will settle down because there will be certainty, not uncertainty.
The elimination of uncertainty is what will stabilize markets, allowing capital to flow rationally again. That means businesses and consumers can make plans and spend money in ways that conform to the laws, regulations, and economic circumstances of the day, whatever they may turn out to be.
The single most important thing that investors can do is to sit out the turmoil until the new global economic landscape becomes more defined. Given the scale of change instigated by President Trump’s tariff declarations, one of the only safe bets around might be that it’s going to take a while for things to straighten out. At least two things are needed as part of said straightening: the completion of country-by-country tariff negotiations and messaging from the Trump White House that negotiations are complete and there will be no further changes announced. It is only after these two criteria are met that markets will truly find their footing on solid ground again.
Because nearly every country in the world has been hit by U.S. tariffs, and because some countries, like China, are further complicating matters by reciprocating with their own tariffs against the U.S., it will likely take quite some time for all the necessary negotiations to even commence, let alone reach some sort of resolution. In the meantime, civilian investors need to keep focused on remaining calm and fostering patience while the global politicos negotiate and work out a solution to the global tariff wars. Trying to adjust one’s investment outlook to each day’s headlines will be exhausting and futile, and perhaps harmful to one’s net worth as well.
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