Tariffs on our most important trading partners—Mexico and Canada, who were operating under the USMCA (U.S.-Mexico-Canada Trade Agreement of 2020), which the 1st Trump Administration negotiated to replace NAFTA (1994).
Then off, then on again…
Then, “Liberation Day” April 2nd, 2025 – Tariffs on the whole world including an island near Antarctica that has no human inhabitants, just penguins, who may have inspired the tuxedo, but trade with no one.
Then On Truth Social: “THIS IS PERMANENT!”
On April 9th, 2025 outside the West Wing:
If you find this confusing, so do traders all over the world.
Contrary to what you might hear on Fox News, Newsmax, or OAN, Donald Trump inherited an economy that was the envy of the Western World. Now there is a risk that the U.S. dollar will cease to be the reserve currency it has been as long as most of us have been alive. So, how does one invest in such an economy?
More than ever before, time horizon is crucial. If the pattern of your withdrawals is going to change or if you need a large lump sum in the future, please call me as soon as you know. Even if you don’t think you are going to need the money for a year, we may want to position assets for harvesting.
Fortunately, LPL offers us a variety of high-yield money market funds that are competitive with today’s CD rates, but do not require the long holding period. These usually have a minimum investment of $10,000. We can use these vehicles in the interim without sacrificing the ability to get some kind of gain.
Plenty of warning also allows us to judiciously prune after-tax accounts to mitigate capital gains over time.
If you are just trying to weather the storm in your pre-tax Individual Retirement Account (IRA), the well-diversified asset allocation with both bonds and domestic/foreign stocks, (large, medium, small) remains a classic.
If you are with Catt Wealth Consulting, this is how your portfolio is built. Stocks are still ideal for long term money, and the price of stocks have been beaten down by the uncertainty this Administration created. That means the dividend stocks in your portfolio are still pumping out their dividends and those dividends are being used to buy more shares. Since the prices of shares are beaten down, you are getting more shares than before, and those shares will rebound when the market eventually rebounds. When will that happen? No one knows.
If you have an after-tax account, we are probably switching any bond positions to state-specific Municipal bond funds for your state of residence. This will make those bonds not only federally tax-free but also state tax-free.
New shockwaves are hitting the market every day, and the threats to benefits like Medicare, Medicaid, and Social Security are concerning.
Clear communication remains central. For matters of governmental policy, please write your Congress-people and legislators. For money matters, please continue to call me at 704-502-6649. I am here for you.
And when the tariffs go away for good… YIPEE!
A Bit of Good News – for a change
As many of you already know, my fee schedule is a breakpoint schedule. The more money in your household, the lower the fee rate. The fee rate goes down as your assets grow. In such a fee arrangement it is also possible for the fee rate to increase as assets diminish, but for the time being we are not planning to adjust fee rates.
Whatever fee rate was established for your household at the time you started with CWC at LPL, you will keep. If you add assets that take you across to a more favorable breakpoint, your rate will go down.
It is our belief that the market is too erratic to track for the time being. If your fee rate were to change for any reason whatsoever, we would let you know before it is changed.
We know you are feeling the pain of having your accounts shrink. At least you will not have to worry about your fees automatically readjusting upwards. LPL allows us to control the fee structure, and we have no intention of adding pain by increasing our fees.
Required Disclosures
- No strategy assures success or protects against loss.
- Stock investing includes risks, including fluctuating prices and loss of principal.
- Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.
- There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
- Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply if you are not buying a municipal bond fund for the state in which you live. If sold prior to maturity, capital gains tax could apply.
