What to do about the Tariff Crash

Overview

• Date: April 7, 2025
• Author: Chris Reilly
• Context: The article discusses the impact of recent tariffs on the US stock market and provides investment advice amid market turbulence.

Key Market Events

• Recent Decline:
  • Thursday marked the worst day for US stocks since June 2020.
  • S&P 500 fell 6% on Friday, culminating in an 11% two-day plunge, the fifth largest since 1950.
  • Major declines were also observed during Black Monday (1987), the financial crisis (2008), and the COVID lockdown (2020).

Analysis and Investor Guidance

• Long-Term Perspective:

  • Historically, stocks have significantly rebounded following major crashes.
  • Holding onto quality businesses through downturns is advised for long-term gains.
  • Historical data indicates markets recover and continue to reach new highs.

• Investment Strategy:

  • Stay the course despite panic and market noise.
  • Avoid rash decisions based on sensational headlines or social media.
  • Use downturns as opportunities to identify undervalued stocks.

Specific Recommendations

• Disruption Investor Advisory:

  • Focus on under-the-radar megatrends like cybersecurity and solar energy.
  • Recent advisory suggested taking profits on an S&P 500 hedge, which gained 203%.
  • Strategic use of options for portfolio protection was highlighted.

• Options Trading:

  • Jared Dillian offers an Options Masterclass with a current discount.
  • Aimed at educating investors on using options as a protective strategy.

Insights from Experts

• Chris Wood's Advice:

  • Ignore temporary noise; look at long-term trends.
  • Past selloffs have always represented buying opportunities.

• Peter Lynch's View:

  • Despite constant negative global news, long-term investment has proven profitable.
  • The S&P 500 has grown tenfold since Lynch’s observations.

Current Sentiment on Tariffs

• Investor Concerns:
  • Initial underestimation of the duration and impact of tariffs.
  • Realization of a prolonged tariff environment causing panic.

Actionable Steps for Investors

• Stay Informed but Disciplined:

  • Curtail influence from fear-inducing headlines.
  • Prepare to capitalize on emerging market bargains.

• RiskHedge Community Engagement:

  • Members to receive special communications for upcoming strategies.
  • Encouragement to engage with the RiskHedge community for insights and support.

Conclusion

• Emphasis on adhering to carefully laid investment plans.
• Reminder that disciplined investing amidst uncertainty can yield substantial future rewards.