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CHINA, RECESSION AND TRUMP – Oh My!

by Paul Barry, Stone Advisors

The talk of a market crash abounds! It is difficult to get away from the speculation that the stock market will soon crash. The TV talking heads seem to never take a break trying to determine what will cause the next market crash. It is not just the business shows. This speculation is everywhere – The New York Times, Forbes and your local news media. They can’t agree on what will cause the next downturn. Is it the trade wars with China? How about the long-expected recession? And then there is Donald Trump – anything related to him is going to cause the next crash.

Prior to his election as President, some pundits stated that his election as President would cause a stock market crash. While other pundits stated that if Hillary Clinton was elected, the stock market would tank. Now we know that none of them were right.

Hardly a day goes by when some stock market forecasters don’t predict that something Trump does will cause the stock market to go down and the economy to crash. Everyone is in the game. Even Donald Trump takes his shots. On October 16, 2019, Donald J. Trump tweeted, “Our record Economy would CRASH, just like in 1929, if any of those clowns (Democrats) became President!”

With all due respect to the President, his ability to predict changes in the future is not any better than anyone else. No matter how shiny the pundits make their crystal balls, they can’t predict the future. Those predictions, no matter who makes them, are based on their speculation about future events.

So, why do all these pundits make these predictions? They benefit from making them. The President wants to get re-elected; his motive is transparent. The pundits are getting paid. They sell books and newsletters based on their predictions. And Fox Business News, CNBC and other media, they are following the old saying, “If it bleeds, it leads.” Fear and pessimism sell. By scaring everyone to death, they build up their ratings and sell more advertising.

As a result of all this turmoil, the average investor underperforms the overall market, according to a Dalbar study: https://www.dalbar.com/Portals/dalbar/Cache/News/PressReleases/QAIBPressRelease_2019.pdf.

How does this happen? The investor is their own worst enemy. They react to all the bad and dreadful speculation with fear and panic. After all, how often can you hear the doom and gloom without doing something? And that something usually results in lower returns.

What is at stake is real. Your hopes and dreams are real and at risk. The reality is that no one can predict the future, just as no one can predict the weather in the White Mountains. So, you must be prepared for whatever happens. Remember in the short term, market movements are random and unpredictable. In the long term, the market continues to go up.

So, punch those pundits in the nose. Take advantage of the opportunities to grow your wealth and realize your dreams. Invest in equities, be as widely diversified as possible and rebalance your portfolio. As all good fighters know, it takes a coach to help you win. Should you want to land that knock-out punch to silence the pundit’s noise and achieve your dreams, find a trusted financial advisor to stand in your corner.

Paul Barry appears courtesy of Stone Advisors. For more information, please contact him at (928) 532-1797 or (520) 404-4165.

Stone Advisors Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.