Remember Trump’s trade wars from his first term? One tweet from the White House, and the markets would go haywire. Up, down, sideways—pure chaos.
Well, here we go again.
This time, though, it’s not China (yet). Instead, Canada and Mexico are in the crosshairs. Tariffs are being announced, removed, reinstated—rinse and repeat. No one really knows where this is heading.
And the markets? Not happy. The S&P 500 is down nearly 10% from its high, flirting with correction territory. But the real surprise has been the tech selloff. Below are the big tech names year-to-date performance:
📉 Amazon: -10%
📉Google/Alphabet: -11%
📉Tesla: -35% (!)
📉Apple: -11%
📉Nvidia: -16%
Why are tech stocks feeling the heat? They don’t move goods across borders. But governments outside the U.S. can regulate them more easily, and that’s where the retaliation may come in.
Last week, I wrote about FOMO —the fear of missing out. Right now, if you didn’t go all-in on big tech, you’re probably feeling pretty good. And if you own companies outside the U.S., even better. This is the power of diversification.
One of the active fund managers we use is actually having a strong year. Their portfolio looks nothing like the major indexes—and that’s exactly why we use them. When the S&P 500 stumbles, they don’t automatically go down with it. This is why we don’t rely solely on passive investing and going all-in on one strategy and geography.
It’s good to hold quality companies that look very different to the index, and who can generate market returns in other ways, so that we can still draw down from our portfolios in times like this.
History backs this up. The U.S. stock market has endured three lost decades—one starting in 1929, another in 1970, and the most recent in 2000 after the dot-com crash. A common thread? Sky-high valuations at the start. And today’s valuations? Well, let’s just say they’re not cheap.
So, while it’s tempting to chase what’s worked in the past, we’re happy sticking to our strategy—owning a mix of investments that don’t all move together. It’s what helps us stay sane during unpredictable times like these.
