With headlines dominated by trade tensions and new tariffs, it’s easy to feel the urge to react and make changes to your portfolio. However, history shows that emotional investment decisions often lead to costly mistakes. Before you decide to exit the market due to short-term uncertainty, ask yourself these three critical questions:
- If I get out of the market now, how will I know when it’s time to get back in?
Markets move faster than headlines and trying to time the perfect exit and reentry is nearly impossible. Studies show that missing just a few of the best trading days each year can significantly reduce long-term returns. The market often rebounds before investors feel confident again, leading to missed opportunities.
- Would I rather miss a correction that could last for a few months, or a rebound that could last for years?
Market downturns driven by policy uncertainty—like trade tariffs—tend to be short-lived. On the other hand, recoveries and long-term growth can last for years. For example, in 2018 when the U.S. imposed tariffs on China, the S&P 500 dropped sharply but rebounded with a 28% gain in 2019. Investors who stayed on the course benefited significantly.
- If I own investments I like, would I really want to sell them and risk buying them back at a higher price later?
If you’ve built a strong portfolio based on solid companies, does it make sense to sell those holdings just because of temporary uncertainty? Selling now might feel like “playing it safe,” but many investors find themselves buying back the same stocks at higher prices when markets recover.
Staying Focused on the Long Term
Market volatility is normal, and headlines will always create uncertainty. But history has consistently rewarded long-term investors who stay patient and avoid emotional decisions. If you have concerns about your portfolio’s exposure to tariffs, let’s discuss how to keep your investments aligned with your long-term financial goals.
*Photo by Markus Winkler
