Last week, while I was on leave, it seemed the world fell apart. The USA announced broad-based tariffs on most imports, and the global economy was poised to collapse. Financial markets tanked.
During this time, my son scheduled a meeting with me to discuss his investment strategy. He watched his portfolio values plummet for the first time and wanted to know what to do. It was a short meeting because my answer was simply, “nothing.”
He was upset that I could suggest inaction when action seemed necessary. “Am I just going to watch my portfolio values decline until there’s nothing left? This is different. We’ve never had an American president with such volatile policies!”
Sticking to a well-constructed long-term investment strategy through market cycles is the only viable approach. It is the only way I can invest and the only way I can teach anyone to invest. I have not seen any evidence to the contrary. Over time, financial markets recover the short-term losses.
This principle becomes even more relevant during crises like the one we are facing—a US president who seems to change policy direction on social media on a whim.
Most of those tariffs were postponed yesterday, leading to a market rally. However, confidence is steadily being eroded. At the start of this year, American businesses were confident that a Trump presidency would benefit them. That confidence is disappearing. The positive sentiment created by policy improvements and cooperation in the global economy has evaporated.
SA and US politicians seem set to create chaos instead of certainty. The fact that we don’t recommend any changes to investment portfolios does not mean I am not fearful. I am. I am also tired, and I suspect you may be, too. This is the third market crisis in five years—it’s not the normal distribution of crises. We have barely recovered from the pandemic, the war in Ukraine, and interest rate shocks in 2022.
I am also angry that politicians are making decisions with dire consequences for my clients’ retirement portfolios. It would be abnormal not to fear what might happen if this chaos continues. The investment industry pretends they are immune to feelings – that only retail investors, like my son, are plagued by emotions. Of course, this is not true; everyone experiences these emotions.
A US recession is now highly likely. Acknowledging our feelings helps us evaluate how they impact our behaviours—not just concerning our investments but also in our relationships, work, and health. If left unchecked, feelings like these can cause far more damage to our lives than the potential US recession. If unrecognised, they could be mistaken for reason or intuition.
I have ranted to friends, discussed with industry colleagues, gone for long walks, painted, and listened to calming music to help me re-centre myself. Just a reminder: I was on holiday! I have also revisited research to confirm we are on the right track.
I encourage you to check in with yourself connect with your friends and colleagues. This is a difficult time for many, and we must acknowledge it while doing what we can to limit the damage to ourselves.
What is your go-to outlet? I’d love to hear.
This is a reminder to Foundation clients that we sent out Communicare and Look, Listen & Learn this week with more information on the current market turmoil. Let us know if you missed it.
Also, the blog will take a breather over the April holidays. I wish you a restful time and hope you take time to reset, too.
Ps: I love to hear your comments. If you are not on our mailing list, you can subscribe to receive this blog every week on our website www.foundationsa.com.
Kind regards,
Sunél
//11 April 2025