I Am Panicked Over The Tariffs!
The tariff situation has escalated and I am panicked! Tariffs played a big role in causing the Great Depression almost 90 years ago and the details of this go around do not inspire confidence that policy decision makers have a handle on how to navigate this situation.
In light of my panic, you know what I am going to do? I am going to stick to exactly the plan I laid out for my clients (and myself) when emotion was not part of the picture. I have no idea what the domestic equity market will do but for now we may not even be down a little the decline is so small. If it ends up going down a lot, it will go through down a little first, breaching its 200 day moving average (DMA) fairly early, the 200 DMA is now at 2776. Most clients still have small positions is BTAL and TAIL (you can search for those symbols in this site's archive to see the rationale and history of these purchases). These positions have been a small drag on the portfolio but made sense to keep as I have not fully trusted the bull market because of the tariffs. If there is another breach of the 200 DMA then shortly there after PTLC will switch from equities to Treasury bills for more defense and obviously I can do some other things if warranted for a more defensive stance.
If you haven't figured out yet, I am not really panicked, not in the slightest. I do believe tariffs are insanely antiquated, anti-free market and potentially quite destructive. But while the details are different this time the market manifestation won't be. If this turns out to be bad, equities will start down a little (might already be there), then go down a lot, then stop going down and go on to make a new high. The only variable is how long that all takes.
I've been writing this for years and it happened even last year. The S&P 500 had been rolling over for months before that Christmas Eve whoosh and the sequence in the previous paragraph is exactly the sequence that played out with a surprisingly fast return to a new high. The only wrong move would have been to panic and abandon whatever your chosen strategy was. Panic is always the wrong move.