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Welp, I guess we’re all headed into a recession now.
It doesn’t matter whether you’re rich, poor, a leftie or a right-winger, Canadian, European, Chinese, or American. Stock markets around the world are all in free fall and we all know why.
US stocks were battered by a sell-off Friday after China retaliated against the United States for President Donald Trump’s tariffs in a tit-for-tat that escalates a global trade war.
Dow plunges 2,000 points after China retaliates against Trump’s tariffs, CNN
And through it all, I feel an odd sense of familiarity. Like I’d been here before. The daily back-to-back 1000+ point drops, the panicky talking heads on the news, the dire predictions of the end of Western civilization as we know it. And that’s when it hit me.
This feels exactly like 2008.
There’s an old saying that everyone feels like an investing genius when stock markets are rampaging higher. But when stock markets tank, that’s when you find out who’s actually a good investor.
But I’m not here to tell you to suck it up and ignore the headlines. The headlines are real, and it’s natural to be scared right now. What I can tell you is what I learned from dealing with the last Great Financial Crisis, and tell you how I got through that last round of bullshit. Hopefully that will help.
Stay Invested
When markets are crashing like this, it’s really tempting to sell everything and move to cash until the dust settles. I remember vividly holding a finger over the “Sell All” button of my brokerage account and trying my hardest not to push that button. My head told me not to, but the fear was screaming at me to do it. In the end, my head won out, and I didn’t push it. And thank goodness I didn’t, because I never would have become a millionaire if I had run screaming for the hills the first time a financial crisis hit.
The problem with trying to dance in and out of the market is that it’s obvious when to get out, but not obvious when to get back in. Markets always recover, but nobody can predict when. The recovery can happen when governments get their act together and start acting decisively to rescue the economy. But it can also happen when a totally random geopolitical event or natural disaster forces the government’s hand, and those black swan events are, by definition, impossible to see coming.
Stay Globally Diversified
Investors have been getting way too comfortable lately with a 100% equity, 100% USA stock market allocation. I get it, the past few years have seen excellent double-digit returns on the S&P 500 driven by advancements in AI, and I’ve heard from multiple people questioning why they should bother with investing in other regions of the world.
Well, this is why.
This crisis, like 2008, is 100% US-created. While other economies like Canada, Europe, or the UK only have one big issue to deal with (i.e. the US tariffing them), by declaring a trade war with the entire world, the US will be nailed with the effects of the largest domestic tax hike since 1968, but they’ll have to contend with retaliatory tariffs from everyone they’ve pissed off.
Canada has already announced retaliatory tariffs, and so has China. The EU is preparing their own set of retaliatory tariffs, and they won’t be the last.
As a result, the US has led the way…in losses.
Index | YTD Performance |
USA (S&P 500) | -14.1% |
Canada (TSX) | -6.7% |
Europe (EAFE) | -0.8% |
There are two basic ways out of this tariff war. One, the US sees the error of their ways and drops their tariffs. The other is that the US sticks to their guns and keeps the tariffs on permanently, in which case the rest of the world will eventually cut out the US from their trade relationships and just trade with each other.
In both cases, international stock market exposure is going to be key to the recovery. So far, it’s acted as a buffer, outperforming the US index by 13%, and it could potentially lead the way back up, when the recovery eventually happens.
Negotiate Your Rent
I’d like to address all the fellow renters reading this blog right now. Now is not the time to be afraid. You’re in a much better position than homeowners shouldering a mountain of debt.
In both the 2008 crash and the pandemic, recessions were coupled with drops in rental prices as landlords starting hemorrhaging money. We’re already seeing rents starting to drop in major cities now, and these forces are likely to continue as this recession takes hold.
The last time we were in this boat (2020), we were able to jump from rental to rental, and ride the market lower. Being nomadic helps, but even if you don’t want to move you can use it as a bargaining chip to negotiate with your landlord.
FIRECracker will be writing an article about how to do this.
Stay Out Of Debt
In every major financial crisis, the people with giant mortgages are the first to get screwed. Especially if they’ve put themselves into a situation where both spouses need to be working to afford the debt payments. Then with one (or both) people get laid off, their finances collapse like a house of cards and they lose everything.
Don’t be like those people. Now is not the time to buy a house.
Fill Up Your Cash Buckets
They say that in a recession, cash is king, and this time is no different.
Now’s the time to make sure that you have 6 months to a year of emergency savings sitting in a savings account. You can put this money into a high-interest savings account, or buy a money market ETF in your brokerage account, but keep this money as liquid and accessible as possible. Job losses are already starting to mount, and who knows how long this will last.
Keep Buying Into the Storm (If You’re Accumulating)
Most of our readers are, statistically, working towards FIRE, meaning they’re in the accumulation phase of their FIRE journey.
If your job seems unstable, or could potentially be affected by these tariffs, definitely build up your cash cushion first. That’s your first priority.
After that’s done, it’s important that you keep buying into the market, even when everything’s falling.
It’s definitely easier said than done. I distinctly remember taking $1000 off my paycheck and putting it towards my index funds, only to have the market tank the next day, erasing more than $1000 from my overall portfolio’s market value.
“What did I just do?” I thought. It felt like I was literally setting money on fire. But what was happening was that I was picking up ETF units at a discount, and when the inevitable recovery happened, we were able to participate in the upside stronger than the downside.
From 2008 to about March 2009, stock markets halved in value, and began their long road to recovery, eventually reaching their pre-crisis level around 2013. However, because we bought as prices were tanking, we hit our break-even point around December 2010, a full 3 years before the rest of the market caught up.
This was the hardest part of investing during a stock market crash, I’m not going to lie. Every fibre of your being will fight you as you continue to shovel money into what seems like a flaming dumpster fire. But you have to remember, this is not the same as gambling, because index funds can’t go to 0. That would require every company in the index to go bankrupt, and while some may because of this tariff war, not all of them will.
The world economy will ultimately survive and start growing again at some point in the future, and that’s what you’re betting on.
Fill Up Your Cash Buckets (if you’re retired)
And for those of our readers who are in the final stages of your FIRE journey, or even already retired, it’s important to keep some cash handy as well.
The 4% rule states that if you withdraw 4% of your starting portfolio, and adjust your withdrawals according to inflation, you have a 95% chance of your portfolio surviving throughout a 30-year retirement. That still leaves a 5% chance of failure, and this is called sequence of returns risk.
We’ve written extensively about sequence of returns risk, but to recap, if you start your retirement during an exceptionally bad period of stock market returns, there’s a chance you could run out of money because you’d be forced to sell as the market drops.
To hedge this risk, we proposed a strategy in our book Quit Like a Millionaire called the Cash Cushion strategy. Basically, this means keeping enough cash outside your portfolio sitting in a savings account (or invested in a money market ETF) to prevent having to withdraw from your portfolio in a down market.
To figure out the size of the Cash Cushion you need, take your projected living expenses (E) and subtract the annual yield of your portfolio (Y). This is how much cash is needed to survive a downturn for a year without selling any assets. In our book, we recommend keeping 3 times this amount handy in your Cash Cushion so you can survive 3 years of recession without drawing anything down.
So, for example, if your annual living expenses were $40,000 and your portfolio was yielding $30,000, then your Cash Cushion target would be ($40,000 – $30,000) x 3 = $30,000.
Conclusion
Things were going so well, with the last administration delivering record breaking stock markets, low unemployment, and well-controlled inflation. But the American government has decided to drag the world kicking and screaming into a recession.
But it’s in these dire times that separate the real investors from the bandwagon-jumpers. Can you watch as stock markets are falling and still do the right thing for your portfolio, or will you lose your nerve and let fear guide your actions?
I guess we’re all about to find out.
How are you managing during this time of crisis? Let’s hear it in the comments below!
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We will have to wait a good 6 to 12 months to see what’s the end result of the tariffs.
The stock market is people shooting in the dark trying to predict next quarter earnings.
“Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.” – Oracle of Omaha
Great piece.
Lol.
The lesson for me is that the occupant of the White House can have a much bigger impact of the economy than I had previously believed!
Excellent post, especially the reminder to be globally diversified! I try my best to explain the importance of global diversification to the younger engineers I work with, but the recent crazy rise is US growth stocks made it impossible to get through to them. Forwarding them
Ben Felix’s Common Sense Investing YouTube videos and links to the Rational Reminder podcast episodes were met with yawns. I guess situations like this where one has to actually touch the stove to realize the danger come in handy.
Yeah, totally. A lot of novice investors have this tendency to chase last year’s winners. It’s more seasoned investors that know from experience how fast things can go south.
Unfortunately, the founding fathers of America did not imagine that one such ignorant, immoral person can ever be elected into office and crash the entire financial system.
Now the question is what can the country (and Congress) do to stop this spiral into complete madness. Where will the checks and balances come from?
Absolutely!
That’s a great question. However, after watching the system try (and fail) to contain Trump for the last 4 years, I have zero faith in the checks and balances of that system working anymore. I would love to be pleasantly surprised, but…*gestures at the news*
It’s unpredictable what Trump going to do next, but I do think Trump does have a plan.
The tariffs was the first part and his entire goal is to bring manufacturing back to USA. I think his next plan is plan is going to create positive tax incentives for companies that brings back their manufacturing back to USA. When these tax cut hits, I suspect we will see the US stock market rebounds through market sentiments.
There was an analysis of what Trump might be doing compared to what he did in his last term when he attempted his tariffs war with China and it failed. Mainly because China circumvented the tariffs by moving their exports to Malaysia and Vietnam and shipped it from those countries before shipping it to USA.
This might be trump’s strategy, I don’t understand step 3 if someone could explain.
1) Global Tariffs
2) Reciprocal Tariffs
3) If all countries imposed reciprocal tariffs, it provides an even economic playing field globally that USA has to pay and weaken the USA currency globally but maintains it’s reserve currency status
4) Tax incentives for companies that brings back core manufacturing, specially ones that’s pretty important to US national security that could be disrupted if China invades Taiwan
The reason Trump starting the tariffs war so early is mainly because he has to do it as early as possible as it will take years for manufacturing to come back to USA.
This is also why it will fail. No one trusts him. Why start investing in the US when these policies could be gone tomorrow? Or in 3.5 years. Even then, the cost of manufacturing in the US is much much higher and inflation would be the result. There is no plan. Just chaos.
If you understand how big the gov deficits are currently and how the existing stock market is inflated based on these deficits, then it all makes sense. The error the OP makes is thinking the rest of the world can offset US trade by trading with each other – the US is the largest final consumer in the world. You can’t replicate that elsewhere. He thinks like an engineer rather than an economist.
Exactly Roger. As if the rest of the world will make a quick 90 degree turn and just magically start trading with each other overnight. It’s wishful thinking. Already countries like Vietnam and Taiwan are capitulating on the tariffs and proposing to remove all the tariffs between both the countries.
There have always been deficits. He is planning for the tax cuts for the ultra wealthy – that is it – it is that simple. Get on board.
The plan is to cause global chaos to destroy US hegemony, at the direction of Putin. There was already strong evidence that Trump and his admin are Russian assets (see Dave Troy’s substack), but the fact that Russia, its satellite state Belarus, Cuba, and North Korea escaped tariffs should be speak volumes.
It’s simply impossible to reshore all products. Too many components need to be sourced from elsewhere, entire factories with expensive machinery need to be abandoned and rebuilt, and stuff like coffee can obviously not grow domestically. This automatically means a huge inflation spike across the board.
Lutnick has already boasted about AI and robotics taking over manufacturing. If citizens face mass layoffs, who will buy those products that are now at elevated prices?
Adding to the point about chaos, let’s not forget about the destruction of US scientific and health institutions, and open talk about eroding or eliminating Medicare, Medicaid, and Social Security. Great strategy for foreign despots to destroy their enemies internally without even firing a shot.
Please turn off the leftist media… lol
Russian state-funded media is considered leftist? That’s news to me!
https://www.youtube.com/watch?v=9TFt7b06ti4
Yes communists and facists are in the left. Freedom on the right.
Haha – nice try. Go live in Russia.
Fantastic summary – others should read and comprehend.
Please no more WOKE comments. No one believes the WOKE propaganda anymore.
My guess, as improbable as it seems, is that Trump’s highest priority is to come to some arrangement with Mexico. Mexico is America’s largest trading partner. Also Mexico is one of the few (maybe only) countries that America trades with that has really good demographics. President Sheinbaum also seems to be the only politician, globally, who’s keeping a calm and rational disposition through all this mayhem… I wouldn’t be surprised if they’re already having significant discussions.
Well, if they had an actual plan it would be useful if there was a reasonable execution of said plan. They didn’t introduce reciprocal tariffs – they took our trade deficits with different countries (and uninhabited islands!) and divided by 2.
I guess you could say they decided to math shit up and and are shit at math.
So the goal is to have children assemble $3,500 iPhones in South Carolina and Texas? We are going to make plastic toys in Los Angeles again? The Maytag factories aren’t coming back to Iowa.
The last administration actually passed legislation and provided funding to incentivize chip, battery, EV and renewable energy production in the United States. The current administration wants to gut that even after companies have started construction of plants. There is no plan. Tariffs are taxes on consumers (us) and other countries aren’t paying us for the privilege of selling into our market.
What if all of our NATO partners decide to cancel their F35 orders and global airlines ramp up purchases from Bombardier and Airbus? We will lose markets for some of our most important value-added exports. Starlink orders have already been cancelled.
We moved a decent portion of our portfolio to short term investments and cash in January and February. Enough to not worry about having to sell any equities in the next year or two.
“I guess you could say they decided to math shit up and and are shit at math.”
Aaahaha you win the internet today my friend!
If he had a plan – it should have been executed A LOT better. This is absolutely ridiculous and to top it off he is continuing to dismantle the constitution. You are living in a dream world.
“Things were going so well, with the last administration delivering record breaking stock markets, low unemployment, and well-controlled inflation. But the American government has decided to drag the world kicking and screaming into a recession.”
Are you for real? What about from Jan 2022 – Oct 2022 when the market declined 25%? Were you blaming the administration then? So you’re saying running $2T deficits year after year was good fiscal policy? I mean, who cares about mortgaging our kids future as long as your portfolio is up right? And all that low unemployment was due to a massive increase in the size of government relative to the private sector. Yeah, real wealth creation there.
As for the tariffs, your notion that somehow everything was ho-hum until Trump decided to slap tariffs on everyone is complete nonsense. Canada has had tariffs on the US for many years in the range of 200-300% on certain industries. Vietnam had 90% tariffs. China’s whole rise to being a manufacturing powerhouse was built on tariffing the US. So I guess it’s okay for other countries to slap tariffs on the US but when the US does it, it’s somehow bad? These were reciprocal tariffs, the key word being reciprocal. Meaning the US applied the same level of tariffs back to the countries that were already tariffing the US. And many of those tariffs the US applied were not nearly the level of what the other countries’ tariffs were.
I’m a big fan of this blog but some of the things you guys wrote come from a very uninformed perspective. Moreover, it reeks of political bias. I get it, you’re Canadian (as am I) so of course you’re left-wing. But when you make intellectually dishonest statements like this one:
“This crisis, like 2008, is 100% US-created. While other economies like Canada, Europe, or the UK only have one big issue to deal with (i.e. the US tariffing them), by declaring a trade war with the entire world, the US will be nailed with the effects of the largest domestic tax hike since 1968, but they’ll have to contend with retaliatory tariffs from everyone they’ve pissed off.”
It is really doing a disservice to your readers.
LOL. Have you even looked into how the tariff (TAX) percentages that “President” Dump roll out were determined?
Please stay more informed.
Don’t tax the penguins.
Who cares how they were calculated? That’s the for administration to decide. And it’s not the point of my post.
No surprise there. You, like “President” Dump, just refuse to admit wrong even when called out:
“The Trump White House Cited My Research to Justify Tariffs. They Got It All Wrong.”
https://www.nytimes.com/2025/04/07/opinion/trump-tariff-math-formula.html
Stay informed.
Don’t tax the penguins.
So you are saying your issue is not that tariffs were put on in the first place, but how they were calculated? Let’s assume hypothetically that they put the “right” amount of tariffs on, then you would be satisfied?
The laughable part here is not only that “President” Dump (a.k.a., The American Cancer) doesn’t understand tariff tax, but also that he/they can’t even justify their reasoning behind what they are doing.
Ilian – no, as USA has ignored services which – oddly enough – the USA has a trade SURPLUS of. How will he react when countries start tariffing those?
Part of the alleged UK tariffs is VAT – charged on damn near everything no matter where it is mad (a uniform sales tax, I guess in USA terms). How on earth is that anti-USA?
Oh and the stock market hit highs under Biden – that is had volatility en route is expected surely? Was the market higher under Trump or Biden? Simple question.
If there’s one thing I’ve learned in all my years in the market is that it doesn’t matter who is President, the market marches to its own tune. How do you explain why the market bottomed and began one of the strongest rallies in history just when the highest death rates were being reported and economic shut downs were beginning all over the world during COVID?
Trump is trying to change the global economic order of the past 50 years to benefit the US. This will take time to play out and there will be an adjustment period, which is happing now and will continue for the next months and years. Will it work how they want it to? I have no idea. But to say he has no plan as most are saying, is just simply incorrect.
I keep trying to post the links in other posts but they keep getting deleted. The Economist has a very good article called “A Trump adviser on how the international economic system should change”. It’s a good read to get a handle on where they are coming from.
Ilian, you are on point – stay the course in your analysis. Even buffet saw that markets are too high based on deficits.
Wanna bet?
It’s a simple scam that just takes advantage of the fact that so many people don’t have an attention span or long-term memory anymore: impose tariffs, wait a few days for the 24 hours news cycle to stop covering anything else, force other countries to come to the negotiating table, agree to terms very similar to what were already in place, remove tariffs, claim “victory.”
You sound like someone who has drunken too much bleach.
“President” Dump’s whole intention was to break it so that his 20 billionaire cabinet members can get richer by breaking it. Bill Ackerman just said it’s called long bonds where you get richer from the stock market imploding. Pretty much what happened in 2008 ‘09 crash by betting against the market. Then they come in and buy anything of any value for pennies. The American Cancer does nothing unless he financially gains from it.
Cullen Roche over at Discipline Funds does a lot of useful writing about macro stuff, including tariffs, and has an interesting perspective. This is one example, and it includes a link to a video for those who prefer to get info that way: https://disciplinefunds.com/2025/04/07/three-things-tariffs-of-course/
“What about from Jan 2022 – Oct 2022, when the market declined 25%?” To clarify the facts, the 2022 decline was not due to one factor or one person’s decision.
“This crisis, like 2008, is 100% US-created.” The financial crisis also has something to do with the decision to deregulate the banking industry, I believe. The countries who bought into the speculations of the assets that could not be understood also got hurt. So, in a way, the US had a hand in the 2008 crisis.
Freedom of speech and information. I hope that is why we are here: to share different perspectives. Just stay civil and nice. Avoiding labeling people will be a good start.
Well said Ilian.
Reading the millenial revolution article made me think – how ignorant. Who is funding this blog btw?
It is stunning how amateurishly this administration has tried to carry out it’s policies … it’s almost as though it doesn’t know what it is doing. This, coupled with the fact that it has blatantly, repeatedly ignored court orders, speaks to a grim future ahead.
Ilian, you are not left, you are not right, you are disinformed. Those sky-high rates you are quoting were never applied. Tariffs were a few percentage points before this trade war was declared, and were already reciprocal.
Stay informed.
Don’t tax the penguins.
Thanks for sharing Illian. I would question your thoughts that “China’s whole rise to being a manufacturing powerhouse was built on tariffing the US. ” – isn’t it mainly foreign company (US/EU etc) investing into building plants to build cheaper products that allowed that?
Then those said products are shipped back to the country that originally had the manufacturing capabilities but chose to produce outside to increase their profit.
For a company it has been cheaper to outsource manufacturing, ship the product, pay the import taxes and sell domestically rather than produce domestically.
The U.S. typically runs a significant trade deficit in goods trade
The U.S. often maintains a surplus in services trade (areas like financial services, intellectual property licensing, tourism, consulting, etc.)
The services surplus partially offsets the goods deficit, though the overall balance remains negative
Look at everything people buy in everyday life in the USA (target, wallmart, amazon etc) where are these coming from?
Now the real twist here is that neither countries nor companies will pay those tarifs. Who will then? The consumer! And just like during COVID, corporations will happily slap an extra 15-20 % where only a 10% tarif was applied and so on. Adding instantly an extra 10% profit. Sadly there no one cares about consumers when there are no legal or financial impact in doing so.
Also the story that the US is not “great” anymore is wrong in so many ways but great marketing: it makes it much easier to sell the idea that drastic changes need to come to come back to “great”.
Unemployment has been 3-4% in the recent years which is a good start!
Apparently (I has to research) during the years of the US producing domestically goods:
– during the 50s unemployment ranged between 2.9% and 6.8%
– The 1960s saw unemployment generally between 3.5% and 6.7%
– The early 1970s maintained relatively low unemployment (4.9-5.9%)
– After the 1973 oil crisis, unemployment rose, reaching 8.5% by 1975
– The late 1970s saw unemployment between 5.8% and 7.7%
What greatness are some trying to get back to again? I’m confused.
The now is pretty good and yes lots can be improved – especially in making sure people live decently with a decent infrastructure and aren’t abused by the greed of a few.
So for a president who wants to reduce prices for Americans & make the country great again that’s quite a surprising start: stir everything up, have the market crash, upset all the neighbors, add tarifs that will impact its own consumers more than the ones outside since they import more than they export, reduce all protections for customers/mid-low income class, and fire thousands and thousands.
I really do understand some have hopes in the new government to help their everyday lives for the better and we will see what the future holds.
ps: can we agree to stop with this “leftist” “rightist” “dump” things? As grown ups humans who can type on a keyboard, let’s remember we all change our minds in life, we all have parents (alive or dead), emotions, desires and we are all going to poop and pee.
De-personalizing others that we’re having a conversation with by labeling them is a lack of respect for our own selves on top of the other. Whatever we do to others we do to ourselves it seems.
(history also shows the end results of such behaviors isn’t enjoyable for anyone – neither party win)
The US fed gov civilian workforce before Trump took office totaled approx 3 million, accounting for just shy of 2% of the overall US civilian workforce, serving a population of over 340 million people (the latter is per the US Census’ estimate for population as of Jan 1, 2025).
*
From Forbes, published Feb 2025:
“The federal workforce is almost exactly as it was when Truman took office 80 years ago, going from 3.09 million in April 1945 to 3.02 million last month. The U.S. population more than doubled over that period, growing from 132 million as of the 1940 Census to 331 million in the 2020 Census, and the total number of non-farm employees expanded from about 41 million in 1945 to 159 million last month. So, the percentage of the total U.S. workforce employed by the federal government shrank from 7.5% at the beginning of 1945 to 1.9% at the start of 2025.”
https://www.forbes.com/sites/dereksaul/2025/02/15/these-presidents-including-trump-added-the-most-federal-workers/
*
You might also find this useful: https://www.pewresearch.org/short-reads/2025/01/07/what-the-data-says-about-federal-workers/
When Trump took office, the US federal civilian workforce was about 3 million, accounting for just shy of 2% of the overall US civilian workforce, serving a US population of over 340 million people.
(Unexpected fun fact: That 3 million for civilian fed workers is about the same total (slightly less) as back in Truman’s time. Biden did add some fed civilian jobs, 138k — I’d be curious to know how much of that tied in with the pandemic. For comparison, Reagan added 197K. And Clinton chopped 339K!)
https://www.forbes.com/sites/dereksaul/2025/02/15/these-presidents-including-trump-added-the-most-federal-workers/
Separately, these were definitely not “reciprocal” tariffs and the administration has basically acknowledged that. The admin was not basing those rates on other countries’ actual tariff rates (even though the term “reciprocal” implies that). Unfortunately, semantics aside, tariffs are a tax that importers pay at the border, in order to be allowed to take possession of the goods they’ve ordered. There are other ways to enhance US manufacturing that are more direct and less discriminatory (we are basically treating existing manufacturers that use any imported inputs as somehow lesser companies, by charging them a big tax and they then have to figure out if they can afford it, and how they might digest it).
I must be a masochist because I love these market downturns. So much potential for buying opportunities and it’s really fantastic for younger people and those in the accumulation phase of FIRE (less good for recent retirees and homeowners w/mortgages).
For what it’s worth, as I type this the S&P500 is still above the bear market number, although it did briefly drop below earlier this morning and my guess is it will transition into bear market soon enough.
My prediction (assuming tariffs stay as is)… inflation numbers in the next month-ish will come in below expectations (i.e. tariffs don’t have as severe an effect as experts are predicting), resulting in a possible upward kick for equities….just a guess but nobody really knows….
Been buying the dip and adding to international names like XEF and XEC
I had a few percentage points of cash from the sale of a growth ETF in February. I just bought back into that same ETF.
My impression is that we are in the middle of a dump-and-pump-and-Trump scheme, and that the US administration is trying to play the stock market like a fiddle.
We will see.
Oh right I do think he might be playing the market. He did that with his meme coin. So yeah might be another rugpull. Guess we’ll see in 4 years.
My entire career was in manufacturing before I FIREd myself a few years ago (30+years). I was very involved in supply chain management during his last administration and after that era. The tariffs last time on steel, aluminum, and electronics caused our suppliers (US/global companies) to raise prices, which caused us to also do the same, which ended up in everyone’s healthcare costs since we made critical care devices. There is no way this self induced idiocy will bring manufacturing to the US in a large or meaningful way. Even the small amount that does come in will be much more expensive for consumers. That’s not even addressing the sheer cluelessness of the formula they used to calculate this crap and hiding it by adding some Greek letters and bad math! I’m not changing investment strategy and will be fine as long as there’s a turnaround in less than a decade or so, but this is stupid and totally self-induced. What I may change is tax strategy if he does in fact cut SS tax, and pulls the insolvency date in sooner.
“The problem is the White House used 0.25 as the elasticity of import prices. Per the research paper the USTR cited in the tariff determination, the elasticity is actually closer to 1, or 0.945 to be precise. The AEI authors say the White House may have used the elasticity of retail prices instead of import prices.
The AEI team went and recalculated tariffs based on using *correct* numbers — and found no tariff rate would exceed 14%, and most would be at the 10% floor the Trump administration set.”
Talk about gross incompetence.
I guess math matters!
Math that shit up!!
What are the thoughts around preferred shares vs. Bonds after this initial market correction is occurring? Understanding it’s good to avoid selling assets during downturns, but is it a good time to sell preferred shares and buy into bonds?
Great post, great hints. It’s always good to be advised by the ones that have gone through big crisis and are in a successful position.
As expected, the comments section turned just in a (biased) political discussion.
Trump lies a LOT, don’t just defend blindly his decisions if you understand nothing about what is happening.
Key takeaways..
– Work towards building a 3-year cash cushion (or maintain a 3yr cushion)
– don’t increase debt OR eliminate debt
– Continue to invest and thus buy stocks at a discount
– Diversify investments (reduce US stock exposure and increase non-US stock exposure)
– Markets will rise and fall. Rely on your own decisions and don’t depend on a President to fix your finances..So learn to make wise choices.
Thanks for that was interested in hearing your thoughts. Shame that folks have to do to and fro rants on your comments pages – there are forums for that surely.
I’ve got a question regarding the use of the cash cushion. Let’s say you’re retired and now everything dropped 15-20%. (Let’s assume markets stabilize somewhat now). Since the stock market has been doing very well for the past few years, you’re still up compared to your original plan.
Would you already tap into your cash cushion right now – as markets are so far from where they’ve been and you lost a lot of money (on paper) or would you say: “Hey, I’m still ahead of my plan, I’m regularly selling stocks as planned to live off”. Or more generally, when would you start shifting from your regular selling strategy to tapping into the CC?
Thanks 🙂
My heartfelt thanks to you both Wanderer and Firecracker. I retired in January 2023 and managed my portfolio according to your investment workshop. Being internationally diversified with a yield shield, cash and bond cushion; I am feeling secure in the face of this crash. You two are the best!
I’m feeling good about my asset allocation and risk tolerance right now. During the 2020 dip I held but didn’t buy anything for a while. This time I have a solid cash cushion and I’m buying on the way down. I had tentative plans to retire at the end of the year, but that date is flexible and I don’t really want to retire into the current chaos. I’ll keep buying and when the market recovers my retirement will be extra secure.
I’m a little surprised because I always worried I’d be really stressed out during market downturns, but I keep being pretty chill about it. Market downturns are going to happen eventually and we’ll just ride them out.
I was thinking, you are not fully diversified. You have US, Canada and Europe. Why no Asia? Considering your roots I find it odd. What is the underlying message?
Yes, HK and China markets been outperforming this year.
“KEEP BUYING INTO THE STORM (IF YOU’RE ACCUMULATING)”
I thought of you on that Monday, April 7, following Trump’s Liberation Day the week before, when I made my first contribution to the equity portion of my yet-to-build portfolio (from a just-received cash inheritance).
Stocks had been crashing the previous 2 days. I bought VEQT when (US) stocks were almost 20% lower than their previous highest point a month or so before. On that day, I only had the heart to invest about a fifth of what I mean to buy this year; I will invest the rest over the next four months (another 20% in each of the following four months), high tides or low tides.
I remembered your own story during the Financial Crisis, and it gave me the courage to go proceed with my plan (increasing equity glidepath over next 5-year period, from 20/80 in 2025 to targeted 80/20 by 2030 when we expect to retire).
Thanks, and keep up the good work!
You’re right, financial crises aren’t just numbers and charts, they’re real consequences that can change lives. Take 2008, for example – for many, it was a tough lesson when the market crashed, and people lost significant amounts of money. It made me rethink my finances and learn not just how to preserve, but also how to grow wealth. I, for instance, found Forex Complex and started studying Forex trading because I realized it was important not to just sit back and wait, but to be able to control your assets. Of course, it takes time and effort to learn, but with the right education and strategy, you can minimize risks.
One major takeaway from the 2008 financial crisis is the importance of transparency in how money is collected, moved, and reported—especially within donation-based systems. Public trust depends on how well platforms disclose where funds go and how efficiently they’re processed. Reading through winred reviews gives a clearer picture of how users interact with political fundraising tools, what concerns come up around fees or recurring charges, and how responsive the platform is to questions. That kind of user feedback offers a window into modern financial behavior beyond traditional banking.
“Your reflections on market volatility during the trade war really hit home. In uncertain times, creative tools like seedance ai can be a bright spot – turning ideas into cinematic videos when traditional investments feel shaky. The multi-shot narrative feature sounds perfect for documenting these historic economic moments!”
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The discussion about lessons from the great financial crisis raises some really valid points. This perspective is refreshing.
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The point about tariffs taking 6 to 12 months to show their real impact really resonates—most of the panic selling feels more like noise than signal. I’d add that the market’s obsession with next-quarter earnings makes it blind to structural shifts in supply chains that won’t show up on a balance sheet for years. Maybe the real lesson is that patience, not prediction, is the only edge left.
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The point about waiting 6 to 12 months to see the real impact of tariffs really resonates—so much of the market reaction right now feels like overcorrecting to headlines rather than actual earnings data. I’d add that supply chains are still untangling from the last few years, so the tariff effects might hit some sectors much later than others. Curious if you think the Fed’s next move will be more reactive to inflation or to the slowdown in consumer spending first.
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Lessons from 2008 still read as cash-flow and leverage, not slogans. I split the old chart screenshots into a grid so each crisis year is a tile you can actually read on a phone — ImageSplit runs in the browser. The engineering-to-FIRE story is clearer when the numbers are not one squeezed PNG.
The six-to-twelve-month patience point is the one most pundits skip: markets price the tariffs in seconds, while the real consequences take seasons to appear. Calling trading a shot in the dark also nails how quarterly noise drowns long-term fundamentals. Most lessons from the 2008 crisis end at the same place — follow data, not headlines. If you ever turn this into a recap video, keep every chart tied to its source; staying faithful to referenced material is what Seedance 3 reference-led video tool is designed for.
The point about waiting 6 to 12 months to see the real impact of tariffs really resonates with me—earnings forecasts feel almost useless right now when every week brings a new policy twist. I keep coming back to the idea that the market is just guessing at quarterly numbers while the actual supply chain adjustments won’t show up until much later. Curious if you think the next few months will force a clearer repricing or just more noise.
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The point about waiting 6 to 12 months to see the real impact of tariffs really resonates with me—everyone’s so fixated on next quarter’s numbers that they forget policy shocks take time to ripple through supply chains and consumer behavior. I’ve been guilty of watching the market react daily to headlines, but your framing makes me realize how much of that is just noise. It’s a good reminder to step back and let the data catch up with the panic.
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The point about markets shooting in the dark on next-quarter earnings really resonates, especially since tariff effects won’t show up cleanly in financial statements for months. It feels like we’re back to the same blind forecasting that defined the pre-crisis era, just with different triggers. Waiting six to twelve months for clarity sounds about right, but that patience is hard when every headline moves the tape.
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The point about tariffs taking 6 to 12 months to show their real impact really resonates—most of the panic selling feels like a reflex, not a calculation. If earnings are already a guessing game, layering on trade policy uncertainty just makes the market even more of a casino. I’d rather sit on cash for a few quarters than try to outguess that chaos.
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The point about waiting 6 to 12 months for the tariff fallout really resonates—earnings estimates feel almost meaningless when companies themselves can’t forecast input costs quarter to quarter. I’d add that the panic selling we saw last week was more about positioning than fundamentals, which makes your “shooting in the dark” analogy spot on. Curious if you think the Fed stepping in would calm things or just delay the inevitable repricing.
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The point about needing six to twelve months to see the real tariff impact is spot on, especially since every earnings call right now seems to be pure guesswork. The “shooting in the dark” line really captures how disconnected price swings feel from actual company fundamentals these days.
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The point about needing six to twelve months to see the real impact of the tariffs is spot on, especially since the stock market’s reaction feels more like guesswork about next quarter than any genuine signal. It makes me wonder if we’re just overreacting to noise instead of waiting for actual earnings data to surface.
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That point about waiting 6 to 12 months for the tariff fallout really resonates—most of the commentary I see is just daily noise reacting to headlines, not actual analysis of how supply chains will adjust. The stock market’s obsession with next-quarter earnings feels even more absurd when the policy environment can flip overnight, making any forecast obsolete before it’s even printed. I’d rather see more focus on balance sheet resilience than these short-term guessing games.
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Reading this years later, the line about the stock market shooting in the dark on quarterly predictions aged well. The GFC lessons about cash cushions and not panic-selling are exactly what carried people through 2020 too.
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The point about waiting 6 to 12 months to see the tariff impact really resonates, since markets clearly can’t price in that kind of uncertainty right now. It’s hard to disagree that most quarterly earnings predictions are just educated guesses dressed up as analysis.
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Solid finance lessons. ConsistentCharacterAI generates consistent AI character images across poses, expressions, and scenes from a single photo.
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The point about waiting 6 to 12 months to see the real impact of tariffs really resonates, since markets seem to react to headlines long before any actual earnings data comes in. I also agree that calling stock movements “people shooting in the dark” feels accurate when so much of it is just guessing next quarter’s numbers. It makes you wonder how much of the recent volatility is just noise rather than a genuine signal.
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Charts from a crisis post get reused for a decade with a new caption. I keep the original plot and only change the headline on the exported image.
The point about waiting 6 to 12 months to see the tariff outcome really resonates, since markets clearly can’t price in that kind of uncertainty right now. I’d push back a little on calling it just shooting in the dark though, because a lot of that selling is driven by real margin pressure rather than pure guesswork. Either way, patience seems like the hardest part of this whole cycle.
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Alien’s point about waiting 6 to 12 months for the tariffs to play out feels right, especially since the market is basically guessing at next quarter’s earnings in the dark. I’d add that the real lesson from 2008 is how long those guesses can stay wrong before reality catches up.
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It’s fascinating how economic policies can have such long-term impacts, like the uncertainty around tariffs. The stock market’s unpredictable nature certainly reflects that. Dressora might be a useful tool for managing such economic uncertainties by helping users make informed decisions about their finances and investments.