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A couple of comments on the market

tjreese

tjreese

All-American
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Sep 27, 2008
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these came in an email to me a while ago.

The new U.S. tariff policies announced last week have driven extreme volatility in the financial markets over the past few days. It is still unknown where tariff policy may settle, as negotiations continue between the U.S. and many other countries.

The risk the markets are mainly suffering from at this time is “headline risk”. This type of risk can drive extreme volatility, but it is typically short-lived. For instance, if we take a look at the movements in the stock market in just a couple of hours today, we have a good example of the impacts of headline risk.

This morning at the open the S&P 500 Index declined 4%, it then rallied 8% on a headline (later proved false) that the Trump administration was putting a 90-day delay on the implementation of reciprocal tariffs on other countries. The S&P 500 Index then declined again by 5%, and then bounced higher by 3%. This all happened in the first two hours of today’s trading session.

However, ultimately, by the end of the trading day, the S&P 500 Index ended up declining a mere 0.2% for the day, and the Nasdaq 100 Index actually gained 0.2% for the day.

Markets hate uncertainty, and the new U.S. tariffs are creating uncertainty about both their short-term and long-term impacts on the economy and financial markets. In anticipation of tariff uncertainty, in the first quarter, we both diversified portfolios further and reduced risk in our tactical asset re-allocations of client portfolios (consistent with each portfolio strategies objectives and risk profile). We will have more detail on this in our quarterly report to clients.

We realize how unsettling it can be to see the types of swings in the stock market that we have witnessed over the past days. But keep in mind that the source of this volatility is primarily due to headline risk, be it true or false. Certainly there are a broad range of factors that impact the financial markets and we are continuously monitoring and analyzing all of these to determine potential impacts on our client portfolios and tactical asset allocation investment process.

For now, and as always, it is important to stay focused on your long-term goals and not be shaken by short-term market volatility. Leave the work and worry to us. That said, if you ever have concerns about the financial markets, your portfolio holdings, our overall investment strategy, your personal financial plan, or anything related to your personal finances, contact us at 810-953-5510 or toll-free at 866-444-6246.

We always look forward to talking with you.

Sincerely,

David Kudla, CMFC®, CRPC®, CWM®, ChFM®, AAMS®
CEO & Chief Investment Strategist
Mainstay Capital Management, LLC
Twitter: @David_Kudla

Vanguard

Tariffs and market volatility: What do they mean for your portfolio?

The newly announced tariffs and broader global trade shifts have contributed to market volatility, testing the patience of even the most disciplined investor. Markets, like people, aren't fans of uncertainty, but it's critical to look beyond the headlines and keep an eye on your long-term goals.

It's also important to note that while the tariff announcement is central to the dynamics at play, there are other currents driving the economy. That's why we caution investors against reacting with tactical or short-term changes to well-considered investment plans—especially since the situation is still unfolding.

In this new video, Vanguard Global Chief Economist Joe Davis and Head of Vanguard Wealth Management Massy Williams discuss the four principles for investment success, how to focus on strategic decisions over emotional reactions, and how Vanguard can help you make the best decision for your goals.

 
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the markets have been overbaked for over a year and were due for a pullback. This tariff message was the latest catalyst to ignite a sell off. An interesting thing to follow is the money supply data which contracted in 2022 and 2023. Money supply contractions are a leading indicator of a recession and they don't happen very often.
 
Thordog said:
the markets have been overbaked for over a year and were due for a pullback. This tariff message was the latest catalyst to ignite a sell off. An interesting thing to follow is the money supply data which contracted in 2022 and 2023. Money supply contractions are a leading indicator of a recession and they don't happen very often.
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yeah I was caught holding some over valued funds and more aggressive than many my age, but I'll ride it out as I have no other choice. ;)
 
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Don't much care either way on the tarrifs, but if this country can't find its way to more balanced budgets it is not going to matter. Annual multi trillion dollar deficits are unsustainable. The dollar is not invincible.
 
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Please don't sell. We need your money.

So the stock market has nothing to do with the economy this week.

When the headlines start having a real effect, we will see what happens.

OF COURSE if you're a long term investor, you don't panic and start selling.
 
BB62 said:
Please don't sell. We need your money.

So the stock market has nothing to do with the economy this week.

When the headlines start having a real effect, we will see what happens.

OF COURSE if you're a long term investor, you don't panic and start selling.
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your credibility is long gone.
 
Thordog said:
what are you holding?
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my entire market probably has me around 2/3 mutual funds that range in growth mostly. without looking maybe 8% or so outside the country and guessing 5-8% small and midcap and so much is large cap growth and no doubt with much overlap. As of now, I have no particular sector fund, but many of my large cap growth are market heavy in technology. I have a few ETFs like QQQ. I'm certainly not at the old rule of thumb of 100-age is how much in stocks and the rest bonds. I'm inverted in that and had I not been as old then time would allow more chance for correction and then some.

Since the market is down, it makes sense to roll over IRA or some 401k into Roth. That still requires paying taxes on that and I don't want to take some of the Roth money to pay that...and so I would need to do it with current cash which I hold enough to do, but like having that money to do what I want without pulling out of the market. The main reason for the roth is that I have a daughter that is in a very high tax bracket and although she wants me to spend my money on myself the roth money would have no tax consequences for her and so I don't need to move all to a Roth. I've done a trust and nothing is easy when trying to be fair to all. No way Kim could take care of the property and although I have a son that wants the mini farm, and pole barn he doesn't believe his share and money he has would allow him the house in addition. So, that is my concern...compounding over time so that the assets grow for Kim and the kids.
 
tjreese said:
yeah I was caught holding some over valued funds and more aggressive than many my age, but I'll ride it out as I have no other choice. ;)
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I'm in the same spot. I have a very aggressive portfolio, including a couple of 529 plans. Haven't wanted to look at the carnage over the last three weeks. I'm sure it's ugly.
I remember back during Covid when the market tanked and telling myself that the next time there's a major shock, I'd act sooner. (but, I didn't). In fact, I didn't do anything with my portfolio during covid. I rode it down and then back up. I was even considering making a sizable investment into Moderna when it was at single digits, but didn't pull the trigger. An investment opportunity mistake in a long line of many.
So, this time around, if you haven't make moves yet, it might be too late. Timing the market successfully is both difficult and rare. If what Trump and the administration expects to happen in response to the tariffs happens, it should come roaring back. But who knows? Nobody.
It's like that scene in "Wolf of Wall Street"
 
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bonefish1 said:
I'm in the same spot. I have a very aggressive portfolio, including a couple of 529 plans. Haven't wanted to look at the carnage over the last three weeks. I'm sure it's ugly.
I remember back during Covid when the market tanked and telling myself that the next time there's a major shock, I'd act sooner. (but, I didn't). In fact, I didn't do anything with my portfolio during covid. I rode it down and then back up. I was even considering making a sizable investment into Moderna when it was at single digits, but didn't pull the trigger. An investment opportunity mistake in a long line of many.
So, this time around, if you haven't make moves yet, it might be too late. Timing the market successfully is both difficult and rare. If what Trump and the administration expects to happen in response to the tariffs happens, it should come roaring back. But who knows? Nobody.
It's like that scene in "Wolf of Wall Street"
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Yeah I rolled over around 42 K last December into a Roth and considering the same maybe wednesday if it drops then. When I invested I was much more dollar cost averaging and understand why that is preferred, but with big drops it is tempting to do the rollover quicker. In a few years I'll be faced with RMD percentage which off memory I think is around 4% first year. I was able to do last December through Fidelity quick and can do Mainstay and Schwab IRAs quick, but unsure about Edward Jones and was told that my Wealthscape could take a couple of days to set up. Course if pulling out of a 401k, then it may take up to a couple of weeks due to the beast. Essentially, my HSA is like a Roth already. Not working I can't put money into a Roth in my name only (I'm taking care of Kim in her own) and would need to check and see if farm income would be allowed.
 
tjreese said:
Yeah I rolled over around 42 K last December into a Roth and considering the same maybe wednesday if it drops then. When I invested I was much more dollar cost averaging and understand why that is preferred, but with big drops it is tempting to do the rollover quicker. In a few years I'll be faced with RMD percentage which off memory I think is around 4% first year. I was able to do last December through Fidelity quick and can do Mainstay and Schwab IRAs quick, but unsure about Edward Jones and was told that my Wealthscape could take a couple of days to set up. Course if pulling out of a 401k, then it may take up to a couple of weeks due to the beast. Essentially, my HSA is like a Roth already. Not working I can't put money into a Roth in my name only (I'm taking care of Kim in her own) and would need to check and see if farm income would be allowed.
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For farm income to be earned income, the income needs to be from farming operations. Say planting 50 acres of corn and then harvesting. Income from farm land rental in not considered earned income.

Very brief on the explanation, tax accountant can provide more detail.
 
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Been fine tuning my portfolio for about year. No selling during this down turn. Ride it out. My consumer staples and utilities were doing OK until the 2000 point sell off on Friday. Very little not being impacted by selling this week. Been doing IRA to ROTH conversions for 3 yrs. Just enough not to move me into a Medicare premium increase.
 
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M51 said:
For farm income to be earned income, the income needs to be from farming operations. Say planting 50 acres of corn and then harvesting. Income from farm land rental in not considered earned income.

Very brief on the explanation, tax accountant can provide more detail.
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So, I don't rent ground. I hire a person to plant and harvest and spray if corn and send him a 1099 of what I paid...custom farming.
 
M51 said:
Been fine tuning my portfolio for about year. No selling during this down turn. Ride it out. My consumer staples and utilities were doing OK until the 2000 point sell off on Friday. Very little not being impacted by selling this week. Been doing IRA to ROTH conversions for 3 yrs. Just enough not to move me into a Medicare premium increase.
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I have very little in consumer staples & discretionary and practically nothing in utilities...all ETFs.
 
tjreese said:
So, I don't rent ground. I hire a person to plant and harvest and spray if corn and send him a 1099 of what I paid...custom farming.
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I'm pretty sure that is earned farm income.
No different than paying someone to help you farm.
I cash rent mine out and have 80 acres in solar.
This is not considered earned income for SS purposes.
 
BoilerJS said:
I'm pretty sure that is earned farm income.
No different than paying someone to help you farm.
I cash rent mine out and have 80 acres in solar.
This is not considered earned income for SS purposes.
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Not sure I understand what you are stating. I do hire someone and give them a 1099 Misc for the year. That is different than cash renting or passive income. I am involved with the actual farming as I determine fert, spray, seed and how much I sell in the futures market. I'm unsure what you mean by, "This is not considered earned income for SS purposes." My taxes consider net profit after expenses on the farm, but I am an active farm operator. Accountants have done this for years for me. Course many years ago I did cash rent and that was passive income I believe that could be used against passive losses from a limited partnership I held. Not sure if this explains anything different than your understandings. It gets complicated for someone that no longer does his taxes to keep up, but the accountant with some others have done this for a while and I think it gets reviewed in Indy in a central office. I'll plead ignorant outside of what I wrote. ;)
 
tjreese said:
Not sure I understand what you are stating. I do hire someone and give them a 1099 Misc for the year. That is different than cash renting or passive income. I am involved with the actual farming as I determine fert, spray, seed and how much I sell in the futures market. I'm unsure what you mean by, "This is not considered earned income for SS purposes." My taxes consider net profit after expenses on the farm, but I am an active farm operator. Accountants have done this for years for me. Course many years ago I did cash rent and that was passive income I believe that could be used against passive losses from a limited partnership I held. Not sure if this explains anything different than your understandings. It gets complicated for someone that no longer does his taxes to keep up, but the accountant with some others have done this for a while and I think it gets reviewed in Indy in a central office. I'll plead ignorant outside of what I wrote. ;)
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Income is income and you pay taxes on it but what I'm suggesting is if you are under the full retirement age than cash rent and in my case solar panel rent does count against your SS benefits.
If you are actively involved in farming than it deducts from your SS benefits.
Otherwise it's 1 dollar off every 2 dollars earned.
I still deduct Farm up-keep expenses off my taxes when renting the property.
Ditch cleaning, irrigation maintenance, culverts, lime etc.
I'm sure your accountants are doing you well.
 
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BoilerJS said:
Income is income and you pay taxes on it but what I'm suggesting is if you are under the full retirement age than cash rent and in my case solar panel rent does count against your SS benefits.
If you are actively involved in farming than it deducts from your SS benefits.
Otherwise it's 1 dollar off every 2 dollars earned.
I still deduct Farm up-keep expenses off my taxes when renting the property.
Ditch cleaning, irrigation maintenance, culverts, lime etc.
I'm sure your accountants are doing you well.
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What you or another in this thread mentioned I believe was medicare...and I just got off the phone with a previous co-worker talking about RMDs and how I need to know how much I can take out before it penalizes me in medicare...WHEN I take it. I signed up for it, but I'm currently on Kim's and so I need to see at what point the income penalizes you in medicare. I wasn't aware of that. I'm a couple of years before RMDs and so I am full retirement age.
 
tjreese said:
What you or another in this thread mentioned I believe was medicare...and I just got off the phone with a previous co-worker talking about RMDs and how I need to know how much I can take out before it penalizes me in medicare...WHEN I take it. I signed up for it, but I'm currently on Kim's and so I need to see at what point the income penalizes you in medicare. I wasn't aware of that. I'm a couple of years before RMDs and so I am full retirement age.
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Quick link for you.

Medicare Premiums 2025: IRMAA Brackets and Surcharges for Parts B and D

Medicare participants with an income above the threshold must pay a surcharge for Medicare Part B and Part D based on their income.
www.kiplinger.com
 
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M51 said:
Quick link for you.

Medicare Premiums 2025: IRMAA Brackets and Surcharges for Parts B and D

Medicare participants with an income above the threshold must pay a surcharge for Medicare Part B and Part D based on their income.
www.kiplinger.com
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Well I can see I need to get Excel out! ;) We have a changing tax bracket in play sometimes over a few years and different bracket levels in a given year. We have RMDs that must be taken with various increasing percentages of untaxed dollars in the market every year. Your market doesn't stand still and entirely possible that your market increase in a given year is more due to higher performance than the RMD and may not only bump you into a higher tax bracket, but depending on the numbers can also cost you on Medicare. So there are a few variables in play as an attempt to redistribute the wealth should you be working hard to better your situation. It is almost as if the government hates responsible people. ;) Again, thank you as it saved me from searching the info...and now I see the market took a big jump upwards and need to see why that was so. It is my life story a dollar short and a day late...
 
bonefish1 said:
Hell of a market today fellas. Good job to the buy n hold and trust the process crowd.
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Yeah, but I thought there would be the drop yesterday. Had I sold Tuesday and rebought I would have enjoyed the market more. My life story...a day late and a dollar short... :(
 
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