Trump. Tariffs. Tantrums from stock markets.
Yes, it feels like Groundhog Day.
It's felt like Groundhog Day for weeks.
But here we are.
I've written about this before.
I called it Russian Roulette with a bullet in every chamber.
But let me cover it again, briefly:
Yes, tariffs are stupid policy.
And yes, for those asking who can't imagine an economic view divorced from politics, no matter the country or leader in question.
They make things more expensive in the country that's applying the tariffs.
They harm world trade.
They undermine the benefits of comparative advantage.
And yes, subsidies are equally bad.
I'm sorry if that means I'm being 'mean' to your team, but, well… it is what it is.
(And I'm sorry if that sounds harsh. I'm not trying to offend anyone, but I hope you'll appreciate me calling a spade a bloody shovel.)
But for investors?
Well, the ASX fell 1% today. US Futures are down 2.75% at the time of writing.
It'll mean volatility, for a while at least.
But in the long term, I expect everything to be just fine.
Why? Well, we've been here before.
Yes, specifically with tariffs in past decades. But also with all manner of economic and geopolitical crises – both real and imagined.
The ASX turned a hypothetical $10,000 into over $130,000 over the thirty years to June 30 last year, according to Vanguard.
And that's not because the last 30 years were calm and uneventful.
We had:
– The Asian Currency Crisis
– The dot com boom and bust
– Terrorist attacks in the US and Bali
– The second Iraq war
– The GFC!
– Grexit fears and Brexit reality
– COVID-19!
– The Russian invasion of Ukraine
And that's just a few things that actually happened. The number of breathless headlines about things that might happen were probably 10 or 20 times that.
But… the ASX still delivered a 13x return over three decades.
This stuff… happens.
It's not fun. In the short term, it hurts our portfolios and messes with our emotions.
Always has. Always will.
But here's something I've written quite a bit, in the past: The ASX (and the US markets for that matter) have never yet failed to regain, then surpass, a previous high.
Now, I can't (morally or legally) promise that'll always be the case.
But given we have 120 years of history – where you can add recessions, depressions, World Wars, stagflation, oil shocks and more to the list above – it's my sincere belief and expectation that humanity's ingenuity and resourcefulness hasn't yet hit its peak.
I think more people and more companies will find more solutions to new and old needs and wants.
And when they do? They'll make money in the process.
The vast bulk of them will likely be publicly-listed companies.
And so I expect the ASX to continue to go on setting new highs for decades and decades to come.
Now, if that's true, isn't it likely that some of the best companies on the ASX will also do the same?
I think so, yes.
And if that's true, doesn't it seem likely that future share prices will be higher, probably meaningfully?
And that dividends will continue to grow?
Again, I think so, yes.
So… I'll keep on investing.
I got some dividends in my bank account today.
I'll likely invest that money in the next few days.
Not because I know this is the bottom. I don't even think it's the bottom. But nor do I think it's not.
I have absolutely no idea if it is, or not.
I'll keep investing because I believe that in 5, 10 and 20 years, quality companies (and the ASX as a whole) will be worth more than today. And so investing, today, is likely to be a worthwhile pursuit.
No promises. No guarantees. But I'm eating my own cooking. By regularly buying and owning shares, for the long term.
Now, speaking of which…
In a complete fluke of timing, we'd already planned to run a FREE YouTube Live session tomorrow (Friday) at 12.30pm AEDT.
I'd like to pretend I had it all planned, and was able to see the future perfectly, predicting this week's volatility, and scheduling it accordingly.
In truth? It was supposed to be last week, but I got busy!
Still, sometimes, we just get lucky.
So… tomorrow at 12.30pm AEDT I'll be running a one-hour YouTube Live for anyone who wants to come along.
Want to know more about my view on tariffs and the impact on the economy?
Want to know what I expect will happen to markets?
Want to know how I'm approaching my investing as a result?
Or just have questions you want to ask about anything related to investing, business, finance and the economy?
Please come and take part!
Just click here, or on the image above to be taken to the event page on YouTube, where you can set a reminder, and YouTube will give you a nudge on Friday afternoon.
(Or you can just go there directly on Friday, of course… but don't forget!)
And as a reminder… it's FREE!
Hope to see you there!
Fool on!
