Treat the Trade War Like Any Other Drop in Stock Prices
The stock market is now on the alert, having increased Chinese tariffs here indefinitely. On Monday, the S&P 500 had its worst day since January , the Nasdaq had its worst fall this year, and the Dow fell 617 points. Apple shares also fell nearly 6% , corporate bond interest rates rose and soybean prices fell. In fact, the trade war is to blame for the roughly weekly drop in stock market performance. Time to panic, right?
Actually, don’t panic. Some stocks have already jumped slightly this morning. And they are likely to bounce up, down, and sideways during trade negotiations. “This is not something that will be decided tomorrow, and anyone who says they know exactly how this will happen is spinning a thread, ” Greg Lucken of Luken Investment Analytics told CNBC .
And on Monday, Citi told clients that, according to CNBC, “continued trading spikes may continue to impact stocks in the short term, but we think the market may have taken that into account a lot.”
Thus, the market will survive these “outbreaks”. What about your money?
What to do with your investments during the trade war
Nicole shared Michelle Singletari’s advice last week: Don’t even look at your portfolio for weeks. Wait until the trade war is over. Things will be shaky for a while, so don’t induce heartburn by checking too often.
But you can tell me, “I can’t! I have to intervene! I’m too nervous to be patient! Please put mittens on my hands so I don’t do anything rash! “
Our 2015 advice (do you even remember that the stock market fell? I think not) is still valid: do not panic sell. Reconsider your distribution instead.
As Lifehacker CFP Leah Snell said then:
Consider doing a little research and developing an allocation that is comfortable and appropriate for your risk tolerance in both upward and downward markets, so that the next time the market increases in volatility, you are better prepared financially and emotionally.
If you are investing in search of big returns right now, seek advice from your financial advisor. Buying stocks that are down now while prices are low can boost your earnings in the future. Consider this a discount on Apple or whatever popular company you’ve been eyeing for.
But if you are investing for the long term, such as late retirement, a portfolio that can withstand the dips and dips will serve you best in the long term. This could mean transferring funds into safer investments (usually bonds rather than stocks) as you approach retirement . Or if you’re out of Rolaids and just want to feel like everything is going to be okay.