$5 Trillion Gone
Most of us kick ourselves when we misplace a $5 bill. We knew we put it in our pocket or that jacket. But we go to find it and it’s gone. It fell out when you pulled out your keys. Your kids took it. Or you may find it months later in the other jacket you have.
That’s $5. What about $5 Trillion. Yes, Trillion with a big fat capital “T”
We’ll, recently that is what has happened within the American stock market over the last month.
This always prompts the questions of what happened and what do we do?
There is a correlation between a new presidential term, policy actions, economic policy and responses by the investing world. That is clear. And perhaps more clear for this particular presidential term than any we have seen before.
The fury of activity since day one has put the world on notice. This level of activity can create a feeling of instability and capital markets tend to like stability. Stability and consistency helps investors know where their investment is probably going to go and hopefully that is up.
The entire finance world does not like variables. Those only complicate the anticipated outcome and make predictions harder to gauge. There is also the consequence of decisions and variables that cannot always be seen immediately and are experienced months, years and decades down the line.
Often the reaction to a market downturn is to do exactly the opposite of sound advice. People continually buy high and sell low. People that bought NVIDIA stock a month ago are now down worse than the overall market. But, they are only down if they realize the loss by selling at a loss. This is why most “retail investors” (everyday people) do not average any growth.
Furthermore, a downturn like this highlights a potential problem for those that are in need of their money during this time, like retirees living off their assets. When the entire market is down, it is hard to find safety. It also means people must lock in their loss because they need cash. This is why solid planning has non-market money for you to use in times like these. The data is clear on portfolio longevity: if you can let your money recover from a downturn as opposed to locking in the loss, your money will last much longer. But, most people are market centric and aren’t sheltered from these situations and run into problems.
For more on this check out the following article.
https://www.cnbc.com/amp/2025/03/14/us-stock-market-loses-5-trillion-in-value-in-three-weeks.html
As always, if you come across a financially related article you’d like to send my way please do!
Best place to send them is to me.
More next time!
Jonathan