Tariff Tantrum

Published On: April 3, 2025

Written by: Ben Atwater and Matt Malick

With the Trump administration announcing massive new tariffs against U.S. trading partners, markets are beginning to price in a recession. Nobody knows the precise damage tariffs will do to the U.S. and world economies, but markets are foreshadowing considerable risks.

This raises the question, should I de-risk my portfolio by selling stocks? In theory, why would you want to own stocks in a time like this?

Unfortunately, it is not that simple. Most investors need the long-term returns that equities have historically delivered, to secure their retirement and financial future. Selling is easy because it might relieve some immediate pain, but buying back is impossibly difficult.

As the pie chart below from Hartford Funds illustrates, the best days for the market come during bear markets and in the early stages of bull markets (before investors even know the new bull market has begun).

And as the bar chart below, also from Hartford Funds, illustrates, you cannot afford to miss the best days in the market, or you will destroy your long-term returns.

As financial advisors, the most value we can add to our clients’ investment portfolios is behavioral coaching and encouragement. We must stay on the course, no matter how poorly the market performs. The only way to capture the upside is to endure the downside.