What now? Know what you own and why.

With the recent tariff news, it’s natural to wonder if you should be doing something with your money, or if the people you are working with should be doing something. We haven’t had clients really express concerns, and while I’d like to believe it’s because they’ve been with us through downtimes before and are comfortable, it’s probably some combination of knowing what I’ll say, not knowing what to ask or being fearful of the answer they might hear. I will say that we reach out proactively many times per year so if clients read what I write, they already know most of my thoughts.

So, what should you be doing and what are we doing for clients?

The first answer is something you now have no control over because it’s backward-looking and that’s that you should always be prepared for markets to do this and think about how you will react before it happens. You can usually judge this from a prior experience, and we can judge this about our clients from how they’ve reacted (or not) to past downturns. One thing we often talk about is that having enough cash on hand to weather a 2-3 year down market if it were to occur can allow you to not make reactionary decisions when markets go down.

Next, and more in the present, try to really isolate how you are feeling? If you have fears right now, is it about your financial situation specifically or is it about the state of the world? I write about this in my “3 buckets” article, but as much as possible try to isolate your feelings to your situation, the things that you have direct control over. So far, this is a very minor decline, and if you are seeing sizeable declines right now it most likely also means you had outsized gains the last two years so keep that in perspective. But this relatively minor (to this point) decline means that while you might be selling things off their highs, you do still have time to make changes. That’s counter to what you may sometimes hear, but if you are in a situation where you can’t sleep at night and have real fears about whether you are going to be OK, you still have time to make changes.

For most people, though, that’s not the case. While I can’t claim to know what will happen in the short run, I don’t really need to. For most people, beyond your cash reserves your investments are meant to be long term vehicles. And while markets are very unpredictable in the short term, they are very predictable in the long run.

This gets me to maybe the most important part – know what you own and why. I recently sent a note to clients outlining the companies that they are invested with, the reasons why and how each it fits into the current environment. Perhaps it is for the long term A.I. and infrastructure story, or long-term demographic trends. Perhaps it’s for the defensive nature or the dividend. Perhaps it’s for the hedge against interest rates or currency risk. I’m very comfortable with what we recommend for clients, and I believe that the long-term story of American companies is greater than economic or political cycles. Importantly, I have also outlined what we DON’T own and why.

If you know what you own and you feel the way I do, then while it’s painful to look at your account balances you at least have a framework and a discipline to fall back on, and you can feel more confident and optimistic and with a level of control rather than fearful and hopeless and lacking control. It also allows you to have perspective at times like this and consider that rather than selling investments at times like this, do you want to consider adding shares of these companies that you already know you like. You should either take stock of this yourself (this is hard to do if you use index funds or ETFs) or ask the people you are working with what you own and why. And you shouldn’t accept an answer that says “just hold” with no other rationale about your individual situation or the bigger picture.

Finally, if you are young and saving in your retirement plans and it is 20 years away, this is just noise. In fact, it may be an opportunity to “just keep buying” at lower prices. By all means, please don’t let this stop you from saving and investing in your long-term future. Just close your eyes and do it.

Want to work with us or think we can help? Get in touch, we’d be happy to.