Markets Are Cratering

The markets were bad before, but they just got a lot worse.

This past Thursday, the S&P 500 fell almost 5%.

It was the second-largest point drop ever in the S&P 500!

Here’s a list of some of the worst performing days in the S&P 500.

Keep the Wikipedia link handy for a second.

What happened?

After the close on Wednesday, the Trump Administration released new tariffs on our trading partners.

And not just some of our trading partners…it’s pretty much everyone.

Here’s the full list of countries targeted

The market freaked out for two reasons.

The first we talked about last week: fears of stagflation.

We don’t need to rehash stagflation again, so let’s focus on the second reason.

Some Investors have lost confidence in Trump.

Trump has been hyping these tariffs for weeks.

But the actual tariffs and countries being targeted make no sense.

For example, Trump is claiming that New Zealand charges a 20% tariff on US goods.

But New Zealand doesn’t have a 20% tariff!

Instead, New Zealand charges a 15% sales tax on all items sold in New Zealand, regardless of where they were made.

The funniest is a 10% tariff on the Heard and McDonald Islands, which is a territory of Australia.

Why is it funny? Because no one actually lives there!

The whole island is uninhabited!

Does Trump even know what he’s doing?

Many investors are asking the same question and jumping ship.

Remember how Thursday was the second-worst day for the S&P 500?

Well, Thursday’s loss is now the third-worst because the S&P 500 lost almost 6% on Friday!

The frustrating part is that the market’s crashing is all self-inflicting!

The last time the government crashed the stock market was back in 2008 during the financial crisis.

Congress was voting to pass TARP (Troubled Asset Relief Program) to keep our economy afloat.

The bill didn’t pass and the S&P 500 had the largest point drop ever (up to that point)!

If Congress had passed the bill the stock market wouldn’t have crashed that day.

The big question is now what do we do?

No one knows what’s going to happen in the coming weeks.

Most of these tariffs take effect later this week and a lot can change.

But the next part is REALLY important!

We brought up TARP for another reason.

The very next day, Congress passed TARP and the S&P rebounded over 5%.

Go back to that Wikipedia page, and you will notice a pattern.

Some of the worst days in the stock market are usually followed by some of the best.

Still don’t believe me?

Study the chart below very closely.

Source: Visual Capitalist

Looking back 20 years, if you missed the 10 best trading days, your returns would be less than half of what they would be if you had simply stayed put.

And 7 of those 10 best days occurred during periods when the stock market was crashing!

What’s the lesson from the chart?

Time in the market beats timing the market.

Now isn’t the time to sell.

You could miss out on some potentially very green days!