Turmoil

O

Omainec

Member
Hi people
With all the selfinflicted market turmoil coming straight out of the white house, I'm wondering: are you getting nervous too? I don't care the fact, we had a drawdown of 15 % ... I'm more worried, where this will lead to. I know, nobody can predict the markets. But I "know", it will not end well, when - to put it in nice words - there are crooks in power, who do not care about rules and use economic instability for political means.
Opinions.
Anybody think it's time to adjust the "VT and chill" logic?
 
I am not going to adjust anything.

Ask yourself: how long is your time horizon? If it's really long, will the current events matter in the long term? They likely won't matter much.
But if you are really getting worried, maybe it's good to reflect on your asset allocation if you are 100% stocks.
 
Yeah thank for the answers. I'm old (few years to retirement) so my time horizon is kinda limited. But I'm not worried about that, as I'm not overinvested. I'm not nervous bc of a drawdown in my portfolio. I'm worried bc I think there is a reasonable chance for "system failure" in the US: Economic rationality being trumped (winkwink) by political power games, SEC slashed, scammers and crooks pardoned, billionaire oligarchs dismantling and / or instrumentalizing governement, blatant market manipulations by the president and governement officials, a president who launches his own shitcoins so you can bribe him in full daylight, institutional checks and balances failing, constitutional rights ridiculed etc. ... I mean ... it' s ridiculous. How big of a difference is there still between the US today and other authoritarian systems, like Russia for example? And would I want to invest Russia for example? Ah no, bc I wouldn't feel it's a stable system to invest in.

So yes, I'm unsure. Not selling, yet. But yes , I'm thinking about switching further investments from VT to VXUS or even investing more in gold ... but who knows, maybe I exagerate and everything is just fine.
 
Lost 32k in the last week (VT only).
Time horizon is 20 years, so I leave it there.
Sadly I don't have cash lying around to "buy the dip" now - that would be good. But maybe my GF can do it for her "VT and chill" strategy, as she's got some free cash...
 
I share your opinion.

I'm not worried about seeing my portfolio go down, but I would have preferred it to be due, for example, to a severe recession in the USA rather than to political decisions that are difficult to understand (at least for me).

Probably because I'm convinced that a country like the USA can come out of a recession (already experienced many times), but I don't know what else the White House will “invent” in the weeks/months/years to come, “legal” or not, and the effect this will have on the world economy.

So I sold my bitcoins last week.
Because I can no longer sleep with an asset that can lose 20-30% in a single day just if the US government declares that it finally wants to sell its seized BTC.

For my stocks (VT only), I accept that I won't be able to know which country/region will lose the least in the years to come.
For the time being, I therefore prefer to continue with VT, continuing my monthly investments and avoiding market timing (VT is at $105.70 for the moment, but perhaps at $95 by the end of next week...).

I would only overweight Europe if I feared other risks (e.g. totally illegal decisions taken by the US government, prolonged denigration of Europe and Switzerland, risk of expropriation of US equities etc.) that keeps me awake at night, even if I do everything to follow the news as little as possible in order to avoid the noise that can lead to bad decisions.
 
From what I (don't) understand about geopolitics, I think what's being done in the USA is stupid and childish. But I'm no economist (even though most of them are exactly saying that the tariff war is bloody for the population, but NOT for the wealthy ones - they probably have enough cash on the side to "buy the dip" and become richer than before).

I'm not timing the market either, I fight off the thought of "damn, if I didn't buy last month, but bought twice my DCA amount this month!"... the only thing is with my GF as she's still at UBS and I'm gently trying to move her away from there. I mean: if the whole world economy is going crazy (everyone's losing money), you're not better off with UBS compared to VT at IBKR...

With regards to Europe, we will have to wait - but always remembering that Switzerland is not part of the EU (yet?!)!
 
nicknamerequired said:
I'm not worried about seeing my portfolio go down, but I would have preferred it to be due, for example, to a severe recession in the USA rather than to political decisions that are difficult to understand (at least for me).
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Fully agree. It's hard to swollow the stupidity that destroyed so much value.
 
gaijin said:
Fully agree. It's hard to swollow the stupidity that destroyed so much value.
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Yeah ... economic crisis are hard to predict. But you can predict some basic economic "rules", as for example "markets will recover eventually" ... now, theese crooks have created unpredictability on a whole other level.
 
You are right of course, IF you are right and we have "such a situation" every few years. That would be "part of the game" indeed. But what IF this is more the kind of situation parts of Europe where in the 1930ies? What IF there are a bunch of crooks in power in the US who are willing to change the game itself? Not saying they will necesarilly be able to get what they want, but don't you think THIS would be enough reason to overthink our basic "VT and chill" mode?
 
Apologies for being so boring about this :) but I think in such a situation (no matter how bad it might appear to be) we need to stick to the basic principles of intelligent investment:

I've usually used the phrase 'stay the course' as one of the great rules of investment success.
John C. Bogle

Here another one:
1744055129530.png

So... no matter what, we just have to STAY THE COURSE. Stop watching the news and trying to predict what could happen tomorrow. This is impossible to predict. And if you don't have the nerves to stay the course in situations this, then it would be advisable to rethink if investing in stocks in the right investment strategy for you.
 
You're right that we cannot predict what will happen tomorrow. What still makes thoughts "go wild" is the fact that apparently Mr. Buffett already months ago put aside a lot of cash - maybe he's got insider information? Of course you can't beat the market and timing the market is less efficient (or impossible) compared to "time in" the market... still: if I have 20k in cash and I buy now, when the market will recover I'll be 20% richer. Well, if Mr. Buffett (and others with shitloads of cash) will buy now (or when the market will be deeper down than it was last Friday), then his 20% gain will be WAAAAAYYYY MORE than what I would've earned. You see where I'm going to?!
 
I view this "turmoil" as a great opportunity to invest at a discount.

Mr. Money Mustache offered an interesting perspective on the last stock market crash in 2022 that I found quite informative.

One of the (increasingly few) advantages that I have as an American citizen is the opportunity to directly invest in Vanguard's VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares). I'm currently investing as much money as possible into VTSAX to take advantage of the discounted shares due to the market crash.

It is really about time horizons. If you look at the past year for VTSAX the performance is terrible. But as I'm not planning on reaching FI until 2032 there is still plenty of time for the market to recover. The long term performance of this index fund is excellent. And the expense ratio of 0.04% is incredible. If anyone knows an index fund with better performance and lower expense ratios then please let me know.

America has an unfortunate history of poor leadership. Barring the outbreak of World War 3, I think my home country will eventually recover from this disastrous president and likely imminent recession. The majority of Americans and vast majority of American corporate interests do not want to see our country collapse. In a few election cycles the situation will be improved after voters remove the irresponsible politicians currently in power.
 
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SprayCoconut said:
Yes, you are trying to be smarter than the rest and time the market :) unfortunately, this is impossible. Even for Buffett.
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I see your perspective, but I'm not trying to be smarter than everybody else who has some cash and invests it NOW as it is "investing at a discount"... ;-) This, because I'll leave my money there for the next 15-20 years - I am aware that I have to "time in the market" ;-)
 
I am especially not worried by this crisis (compared to others) for the following reasons:
- Tariffs are a very Trump-linked weapon, and we know for a fact that he isn't staying more than 4 years in office, with a strong likelihood of democrats undoing everything he did immediately (if he doesn't change it himself before that). The whole crisis can therefore disappear as quick as it appeared.
- Tariffs will mostly hurt the American consumers and the big non-US export firms. If you are heavily invested in the S&P500 / NASDAQ (like I am), you are not the biggest loser, and I think the markets strongly overestimate the future negative impact there. This is particularly true for many NASDAQ firms, services not being concerned by tariffs, and even more so for the Magnificent Seven, in almost monopoly positions (I would prefer to speak about the Magnificent Six, as a longtime Tesla non-believer).
- For the few years the tariffs are going to last, we might actually see some positive effects for the American economy, with forced relocalisations and boostering of local production. Might also not, but since the markets seem to consider that they won't, can only be a positive surprise.

Anyway, I understand the worry if you planned on retire before the end of Trump's presidency, but I remain very optimistic so far.
 
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CPMB said:
Anyway, I understand the worry if you planned on retire before the end of Trump's presidency, but I remain very optimistic so far.
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I'm no economist, but I find it hard to be optimistic just now.
Tariffs will hurt the people - let's say the "normal people" - in their pockets, everywhere in the world. Inflation will rise, as the tariff war is leading to counter the US tariffs with tariffs as well.
Yes, I do see the light at the end of this "4-year tunnel", but TBH: how much will my money lose worth/power during this period of time? How much "poorer" will I become?
 
OxygeN said:
I'm no economist, but I find it hard to be optimistic just now.
Tariffs will hurt the people - let's say the "normal people" - in their pockets, everywhere in the world. Inflation will rise, as the tariff war is leading to counter the US tariffs with tariffs as well.
Yes, I do see the light at the end of this "4-year tunnel", but TBH: how much will my money lose worth/power during this period of time? How much "poorer" will I become?
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I do not think honestly that normal people will suffer a lot. When I take a look at the goods I consume in Switzerland, almost nothing comes from the US (only services, which as I already mentioned are not concerned by tariffs, at least for now). Even the US brands here have been producing locally for many years (like fast food companies) or in Asia (clothing, electronics). The latter will certainly get more expensive for US consumers, but not "everywhere in the world", I would even expect the inverse effect, as China/Taiwan/Vietnam will try to redirect a big part of their production towards Europe. You are however correct I believe for the inflation consequence, especially in the US, which could be a problem for investing, hitting especially hard a still weak real estate sector.

But I'm no economist either despite having studied in the field, and I could be completely wrong. :D Anyway, my point was that we encountered in the past crises way more worrying in my opinion, without any "light at the end of the tunnel", and from which we always recovered.
 
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