Wall Street is turning its back on Trump and flashing an economic warning.
On-again, off-again tariffs, mass government layoffs, funding cuts and immigration crackdowns have seriously spooked Wall Street, which is emphatically rejecting President Donald Trump’s chaotic economic agenda.
I should have pulled my 401k (retirement plan) on Jan 1. I didn’t. I lost 17% since then. I pulled out and put it into a money market account. (Still in the 401k but heavily protected.) Will go back in maybe June.
Timing the market is virtually impossible. I've believed that Trump would be bad for the US economy overall, but when to pull out? And even more important, when to put back in? You pull out too early and miss potentially massive gains. Assuming you time the withdraw perfectly, you wait to long to put back in and you miss out on the recovery.
I should have pulled my 401k (retirement plan) on Jan 1. I didn’t. I lost 17% since then
Jan 1 is an arbitrary date. Why Jan 1 for your measure? trump was elected on Nov 5th and inaugurated Jan 20. The S&P500 closed at 5782 on Nov 5th. At its peak since then it was at 6144 (Feb 19th). Jan 1 was a holiday so the market was closed anyway, so I'll assume you meant Jan 2 which closed at 5868. By that measure the S&P500 has only lost 4.2% from Jan 2 to now. I understand your portfolio likely doesn't match the S&P500 perfectly and you have more exposure in some sectors and less in others.
Will go back in maybe June.
It may be worse then, it may have recovered. No one can know. If it is worse then, you'll be buying on the cheap. If we've had a recovery you will have lost out because you're out of the market when the recovery occurred. Looking at past historical recoveries, I can tell I would have NOT guessed the recovery was going to happen at that moment. That tells me I would be equally bad at predicting when the next recovery will occur.
If you are close to retirement, you should have withdrawn perhaps 5 years of living retirement expenses already from the market years ago into boring safer bonds or even straight cash (you would have missed out on the 35%ish increase in value from being in the market the last two years though). If you're far enough away from retirement, then this is the risk that comes with volatile investing. If someone doesn't have the comfort with this amount of risk, I completely understand that, but this is where the larger gains come from. Investments with little to no risk also offer little to no returns.
The TLDR, I'm not smart enough to time the market. I don't have confidence in those that claim they do.
I won't say that this isn't good advice, but I've always thought the subtext of this advice was
Please keep your money in The Market so we can keep leveraging it.
Please keep your confidence in The Market.
PLEASE don't start a run on our banks and clearing houses.
Trying to time the market is risky, but ignoring your money isn't zero-risk either. Nothing grows forever no matter how much Capitalism insists it does.
This is why your 401k should be set it and forget it.
Pulling money out because the market took a large downturn is a rookie mistake. If the economy crashes to the extent it likely will, the money you pulled out will be worthless (especially since I bet Trump thinks you can just print more money to fix a recession).
The market will eventually bounce back, though. All you're doing by selling is helping the rich get more wealth since they're buying up everything for cheap.
For example, during the great depression an entire town pooled their money and bought shares of Coke and left them. Every family that did so ended up very wealthy.
? Why would my money be worthless? That makes no sense.
I moved it from the s&p fund in the 401k to the money market account still in the 401k. If I have (for example) $100,000 right now and I put that into the money market account. Then the market crashes I basically still have the 100k . Now it bottoms out and I put the money back into the s&p. I just sold high and bought low. When the market rebounds I get the gain. How do I have less?
Now could I in theory miss the rebound? yes
Then I’d be out the money. Then I would have less than what I would’ve had I stayed in.
The if market tanks as bad as what I think it will. Then I have made the better decision.
No guarantees either way, but my gut instinct says we’re in for very bad next couple couple of months.
As for set it and forget it. That’s still stupid. Always watch a 401(k) to see. Are you really getting the best return on your money or should you be in a different fund within the 401(k).
Most times I would not put the money into a money market account. Most times I’ll just ride up and downs and come out better than the long run. But there are times it’s better to make a harsh decision.
The heritage foundation has shown it is more than willing to tolerate this instability in order to crowbar in their regressive and unpopular policies that keep them in control.
Predicting Trump and co are going to start saying Wall Street went woke and corporate boards are being paid for their opposition by China and George Soros. All the greatest hits.
Wall Street is playing the game. Heads they win, tails you lose.
As much as I love to see the upper crust eat each other, I just wish the fallout was more palpable for everyone at the bottom.