By Haddon Libby
On April 2, 2025, the day after April Fool’s Day, President Trump announced the most significant change in global trade in nearly a century. In the two days following his announcement, stocks fell by 10%, marking one of the worst periods in the history of U.S. stock markets.
What should you do now? Sell everything and stockpile toilet paper and Perrier? Buy bars of gold from Costco? Perhaps plan for the end of days and ready your fallout shelter for World War III?
To use a marginally offensive phrase, you’re already “half-pregnant,” so now is not the time to think about birth control. The point being markets have already fallen a lot so now is probably a little late to be thinking about those things. Remember, the old adage: ‘Buy low, sell high’? The high time was a month or two ago. Now, we’re far closer to the bottom than we were a few months back when everyone was happy about the market.
Unless you need the money from your 401(k) or investment account soon, things will likely improve with time. Do you really think the Republicans want to head into the midterm elections with higher inflation, rising unemployment, and a disgruntled electorate?
Even if you believe Trump is a Russian operative with all the subtlety of a chainsaw, much of what’s being done arguably needed to happen. The execution may leave much to be desired, but even this flawed approach could lead to a positive outcome.
For example, inflation was making it harder for many people to afford basic necessities, let alone purchase a home. As long as the government continued spending $2 trillion more than it collected annually, the economy would remain strong—at the cost of persistent inflation and lower affordability. Reducing government spending to a more sustainable level was likely to cause a slowdown in any event.
Whether bold or reckless, President Trump then tackled past government policies that had led to a record trade deficit of $1.25 trillion. In exchange for cheaper goods, Americans were sending more money abroad which slowly weakens an economy.
As an example, the cost of a worker in a U.S. auto plant is $70 per hour, compared to $40 per hour in Canada and $6 per hour in Mexico. How can U.S. auto workers compete with such unfavorable economics?
This principle applies to the Coachella Valley too. If we want to create more and better-paying jobs, our municipal governments must stop hiring firms from outside the Valley and prioritize using local companies. Likewise, you and I should patronize locally owned restaurants, accountants, architects, and other businesses to strengthen the local economy.
Getting back to your investment portfolio, the short-term pain of tariff wars is likely to slow the global economy. This could lead to demand destruction, which may result in lower prices—and, consequently, lower stock prices for some companies as earnings growth slows.
There is a rainbow right around these clouds. The Fourth Industrial Revolution. In the near future, we’ll see self-driving cars. Healthcare breakthroughs are likely as supercomputers and generative AI unlock discoveries once thought impossible. Advances in renewable energy and pollution reduction will probably accelerate. The way we learn and educate is poised to become faster and more effective. In general, most aspects of life will transform as technological innovations uncover better ways of doing things.
These imminent advances are likely to create significant value, translating into higher stock market valuations.
Whatever happens over the next few days, months, or years, the future looks bright, and the value of your 401(k) or investment account will likely rise. Everything unfolding in Washington, D.C., today will either make America stronger or lead to a historic defeat for Republicans in the near term. Either way, things will be fine.
Haddon Libby is the Founder and Chief Investment Officer of Winslow Drake Investment Management, a Fiduciary RIA firm. For more information, please visit www.WinslowDrake.com.
