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there's a lot of scary headlines out
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there about the coming Trump tariffs and
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the possibility that it might tank the
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stock market this is not a political
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Channel but I have been a financial
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adviser for over 20 years and I feel
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it's my duty to kind of share my
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thoughts on this because it's critically
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important over the last two years the
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stock market the S&P 500 is up over
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60% that's a big big move and that's the
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good news the bad news is anything that
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can go up by 60% in 2 years can probably
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go down by 60% in 2 years so thinking
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through this is important I want to do
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that with you so the first thing I want
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to do is share some of these headlines
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Bloomberg has a headline says US Stock
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markets record run to be tested by the
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Trump tariffs Baron follows up with
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Trump tariffs and fed on collision
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course stock market will be collateral
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damage so the good news is we know what
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the impact of some tariffs are going to
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be right this is Trump's second term so
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we can look back at his first term and
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see what happens so let's do that let's
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let's first look at a report by
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Bloomberg where they say that the past
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Trump tariffs hurt the US economy and
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stocks research finds but but stick with
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me because this is what the article
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found I'm going to share some important
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thoughts after this article so this is
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the Bloomberg article it says tariffs
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imposed on China during President elect
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Trump's first term had a negative effect
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for the US economy according to newly
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released research from the Federal
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Reserve Bank of New York then the
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article goes on to say the New York fed
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researchers found that tariffs announced
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in 2018 and
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2019 of 10 to 50 % on more than $300
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billion worth of imports from China it
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led to a negative effect on the US
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economy that is substantially larger a
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bigger impact than past
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estimates let me keep going for just a
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little bit longer they found the US
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Stock Market fell
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11.5% on days when the tariffs were
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announced amounting to over a $4
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trillion loss of
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value the declines were persistent and
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markets did not bounce back in the week
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following the announcement according to
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the these researchers okay it's a it's a
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credible Source right this is researched
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by the New York fed but let's look at
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2019 right that article made it sound
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really really bad and I'm not saying yet
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whether these tariffs are good or bad or
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what the impact is going to have but
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let's just go back to 2019 cuz if all we
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did was read that last article about the
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the negative 11.5% and $4
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trillion uh worth of equity value being
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destroyed on the weeks when this was
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announced but let's go back to
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2019 that year was up including
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including dividends over
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31% you know if that is a negative
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impact well then sign me up again and
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before you get to harsh into the
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comments I say that in just right but
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these things are very complicated so yes
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most phds most economists are saying
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tariffs and particularly a tariff war is
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a really bad thing right we put on a
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tariff on one country they retaliate and
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put on another tariff and soon the cost
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of doing trade uh with other countries
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goes up and the cost of goods goes up
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and and who gets hurt is the consumer
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and the consumer discretionary consumer
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spending I shouldn't say discretionary
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consumer spending is 70% 70 70% of the
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US economy so when the consumer gets
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hurt we all we all get in trouble okay
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so CNBC has has an article and they talk
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about what caused the stock market to
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Boom in
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2019 I think it's important to revisit
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that right because as I record this has
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been 5 years since 2019 so according to
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Bloomberg's article their their key
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takeaways is 12 months ago this is being
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written at the end of 2019 they're
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saying 12 months ago few could have
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imagined the S&P 500 delivering more
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than 28% in
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2019 and they say it was a year fear
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filled with fears that were never
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realized a global economic slowdown and
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a disruptive trade war and potential
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missteps by the Federal Reserve policy
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so they're saying that there were these
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fears that never materialized and then
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they also say that a hot technology
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sector helped out and it certainly did
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but um let's let's go and and look at
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how did we end up with an over 30%
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return in 2019 there's really two things
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that happened and it's been a while ago
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but at the end of
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2018 there was a pretty rapid decline in
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the stock market you can see right at
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the instead of having a Santa Claus
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rally we had a a Santa Claus get tossed
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into the trash uh and the market was
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down quite a bit you can see here this
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is the S&P 500 it maxed out it it looks
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like at about 2900 and it reached its
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low at about
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2400 right so that was a pretty dramtic
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atic drop right at the end of
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2018 and so that helped with some of the
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2019 um increase of over what ended up
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being over 30% but you can see it was
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almost 10% if we took the highs of
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2018 2019 still ended up up almost 10%
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versus
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2018 so what do I think's going on and
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more importantly what do what what
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should you you be thinking about what
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should be on your radar screen first
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these things are incredibly complicated
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in general I think T I think strategic
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tariffs make a lot of sense right we we
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want to make sure that our trade is fair
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and when other people are other
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countries are not playing fairly we want
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to use tariffs to encourage them to play
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fairly so American companies can compete
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on a Level Playing Field so strategic
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tariffs I think we all agree make a lot
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of sense broader tariffs are where
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things get a little
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murkier and many people are are saying
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you know president Trump doesn't
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understand the tariffs are actually uh
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paid by the company the American company
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that's bringing the goods and services
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you know what Trump is a smart guy Trump
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understands that so I what I think is we
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don't know this is a very complicated
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situation but what we do know is as of
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the time of of this recording the stock
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in fact today the stock market is at an
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all-time high the S&P 500 is at an
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all-time high and by almost any measure
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of valuation the stock market at at best
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is is close to or at fully valued and at
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worse is overvalued right and we don't
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know and even if it is overvalued we
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don't know if that's going to continue
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for a period of time I'm not calling for
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a market Crush but what I think we all
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need to do is remind ourselves that it's
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been a good two years in the stock
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market and it's easy to get complacent
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it's easy to forget the discipline that
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we have with our asset allocation that's
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designed so that if something scary
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happens in the stock market we can
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withstand that we're not going to have
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anguish we're not going to have mental
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pain we're not going to put ourselves in
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a place of financial Doom uh or
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financial Peril if the stock market has
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a correction um particularly if it has a
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big correction right that's what we're
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all worried about so either because we
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need the funds in order to live off of
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or frankly just because the the drop the
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the decline in the stock market causes
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us so much pain it's not just discomfort
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but it it it goes above discomfort it
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goes to I can't sleep at night night I
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have anguish I have I can't get it out
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of my mind I'm constantly thinking about
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it and then for emotional reasons you
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become a forced seller in a down Market
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either because of that mental anguish or
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because we need cash so this is a good
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time for all of us to relook at our
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long-term allocation to make good
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decisions and say is this my long-term
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allocation can I withstand a stock
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market correction so it's about making a
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good decision with our investments it's
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also about making a good decision with
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our life because we're doing this for a
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reason and for many of us is to become
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financially independent when we can quit
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our jobs and retire and that's why I
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made this video up here why waiting the
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65 to retire might be a big mistake
