US Stock market decline

[mumof5andfat]

The current stock market decline in the US is making me anxious. I'm currently 10% down on my portfolio having been 10% up just over a month ago. I need to stop looking at it so often, but Trump's policies are just everywhere. one minute he's implemented tarriffs, the next he's changed his mind. Please someone give me some hope.....I know none of us can second guess what Trump will do next, but surely he can see the mess he's created in the financial markets? 4 years of this????

Sadly, it's often the stock market that acts as a brake on crazy ideas; see Liz Truss. It'll stabilise again, but surely it took a falling market to make Trump rethink tariffs.

Consider it a buying opportunity!

What is your investment time horizon / When are you planning to drawdown on the portfolio?

Part of the decline is because the pound has also fallen against the dollar. With equities you tend to have volatility, that is upwards and downwards movements. You need to think long term, I only check values once a year.

wish i could do this. I'm in for 5 years + (as that's when my children will hopefully be in the next stages of their lives: a couple will be off to uni, one hopefully getting married/house buying etc..but my portfolio being soo down is quite something. I should do what you do and forget about it. I will try it.... but you're right, the decline in the Dollar is a double whammy for us

His constant changing of goalposts is just creating chaos, companies can't operate efficiently standing so close to the cliff edge. I understand his arguments for the tarriffs, but I honestly thought it was just a negotiating tactic, but he really has gone through with it (and then doubled the tarriffs with China) and now we have the threat of tarriffs applying to Europe

I’m sure Trump and his billionaire chums will be loving being able to buy low, and make a killing when the stock prices rally when he reverses the tariffs.

I use a Global index tracker and a mixed asset, volatility managed fund ( which hasn’t dropped as much so it’s doing it’s job ) still heavily weighted to the US, but if that percentage changes then the balance will automatically shift.
Don’t forget there are still plenty of Value / defensive stocks in the US, it’s only if you are heavy in the S&P or Nasdaq that the losses are large ( relatively speaking). Tesla’s always been up and down like a yoyo.
I’m still buying into an All world index fund. Lower prices are good when you’re still accumulating, look what happened in 2020, people panic sold and locked in their losses.

My one regret was getting out of a global tech fund 3 years ago, it’s outperformed everything but it could have easily gone the other way, I’d more than doubled my money and thought I’d play safe.
I’m glad I got out of Scottish mortgage and Fundsmith though.
All investment is risky, all those people heavy in ‘safe’ Bonds in 21/22 could never have foreseen what happened!

Are you in global funds or only the US? Global will readjust to best performing companies / regions anyway.

It’s horrible isn’t it. Seeing them go down to a loss when they were previously in profit. I put another 20k into my GIA 10 days ago which I thought was a good idea as prices were down. Had to watch if fall another 5% since then.

I keep repeating to myself ‘it’s time in the market, not trimming the market’ but I’m still feeling anxious. Part of me wants to put more in and see it as buying opportunity but I think I’m too scared. Also don’t want to leave myself short of cash savings and be forced to sell them at a loss.

I think the advice to stop looking is wise.

It will stabilise and then recover. That's just part of investing.

I’m 67 and will be pulling my investments in 3 yrs…
Thankfully my loss (based on Friday) is under 2%. I’m hoping things stabilize.

With 3 years to go, shouldn’t you be derisking now? Unless you have plenty of other income/savings.

We are, in readiness for early retirement - we’ve already got 3 years of income in a Short term money market fund and I’m dithering about setting up a 3 year collapsing Gilt ladder for the 3 years after that - that means selling another chunk of investments though and if interest rates stay above 3.5% it’s a pointless excercise as the MMF will do better than the Gilts.

Fixed term mortgage providers certainly don’t seem to think interest rates will fall that far but then I remember how we were locked into a 5 year deal some years ago at 5% and rates plummeted in year 2 or 3.
A crystal ball would be nice.

Does "derisking now" mean selling equities, thus realising the current low values as a loss?

Derisking means realising some of your gains from the past few years and putting them in safer investments or cash.

Only new money invested directly before the ‘correction’ will have actually lost anything, we’re only back to where we were in November, my investments would have to halve before all growth over 5 years was wiped out.

I remember putting £25k in a bond fund literally the week before bonds crashed, it fell to £19k and took until last year to get back to £25k - I then sold it.

@BorgQueen i don’t have a sound exit strategy. I dropped my bank associated investment team to self manage my portfolio. I’ve managed to grow it nicely over the past few years.
dh and I have cola lifetime workplace pensions which allow us to not have started collecting our government pensions which are growing at 7% but again must be accessed at 70. Plus we each have investment portfolios of 300K each.
I need to find someone I trust to help me exit without too much income tax.
care home fees are income based no assets taken into account.

With that amount of investment , an IFA might be a good idea.
There is a decent pension/ retirement forum on moneysaving expert, some very knowledgable people on there.
There is also citywire forums.

I take it your investment portfolios aren’t in ISAs with you mentioning tax?

Mentioning care home fees -
Are you aware of immediate care needs annuities? I know if you buy one from a pension, it’s not taxed like normal drawdown is, not sure about tax when buying one with funds from a general investment account.

The best advice is to do nothing, almost always. As an individual investor, you'll always be too late to do anything helpful. Just wait it out or (as pp suggested) see it as a buying opportunity. I know what you mean though- I'm down 5% and I'd been feeling so smug until then. Just don't panic and behave reactively. We all wish we'd got out of tech and into defence a month ago but the moment has passed (well, maybe not for defence but as a long term hold). You may as well buy a ticket with last week's lottery numbers on.

Someone mentioned derisking. It wasn't clear to me that you were saying you'd be retiring in 5y, but anyway unless you're planning on buying an annuity, this is slightly old-fashioned advice. If you'll be drawing down, you need to stay invested into retirement and only move the assets that will be providing your income for the next 3-4 years or so into something lower risk. Don't sell now, anyway.

Yanbu OP. I'm holding off investing because of the turmoil in the US and the contagion a crash there could cause.

But I'm a pessimist by nature so what do I know!

Thanks @BorgQueen I'm in Canada so the rules are slightly different and I really really need to find an exit strategy. Care home fees here are mostly manageable.

@IndiraCake in our case we are retired have good combined incomes and don't need to draw it down but the canadian government requires you to do so from age 70 on (i believe something like 14% per year) but it's added to your income and taxed accordingly? and then what do we do with it? like the uk the savings accounts insurance limits are low. I can do nothing for 24 months but i need to become knowledgeable fairly quickly. i have a couple idea's as to who i can trust to steer me into the right direction just need to do it.

most stocks are overvalued and the market will be going through a correction, the worst is probably yet to come. if you have a long-term horizon the best thing is to do nothing.

it's best to hold your wealth across various assets, e.g. cash, bullion, shares, crypto (depending on your risk appetite), property etc. e.g. gold goes up when stocks go down, but it will go down once stocks do well again. the aim is to have a balanced portfolio and not be too invested in one thing.

My tendency in these situations is, like PP said, sit tight and, as I'm still investing, I'm just buying stocks more cheaply that I did a few weeks ago.

I'm planning to retire in a few years time and, worst case for me, is that it might delay things a year or two. If that happens, I'll use the extra time working to build up a cash buffer and just be a bit more careful with my spending in the first year or two.

I’d say unless you really need to, don’t check your accounts and ABSOLUTELY don’t sell! Sorry for obnoxious caps 😂 If you can, keep investing as you were before.

I haven’t checked mine recently, but do remember seeing my portfolio take a massive dive in March 2020 - luckily as it happened my only reaction was to take a screenshot for posterity and invest more!