It was a historic week for Wall Street – but not in a good way. Donald Trump’s sweeping reciprocal tariffs announcement on “Liberation Day” resulted in the biggest rout in U.S. stocks since the market crash of COVID-19 in 2020. The S&P 500 index cratered more than 9% this week alone, and now sits deep in correction territory after having fallen 17.4% from its most recent record close. The Dow also slipped into correction, ending the week 14.9% from its most recent record close. The Nasdaq fared even worse, slumping into bear market territory with a 22.7% retreat from its most recent record close.
Roughly $3 trillion was erased from the S&P 500 amid worries that Donald Trump’s sweeping new round of tariffs could plunge the economy into a recession. The index is on the brink of a crucial technical inflection point that threatens a longer term wipeout. The damage was heaviest in companies whose supply chains are most dependent on overseas manufacturing – Apple, Nvidia and everyone of the Magnificent Seven have been hammered.
How much worse will it get?
Future Wealth’s View
In their book titled “Basic Laws of Human Stupidity”, Carlo Cipolla and Nassim Taleb highlight how rational people have developed frameworks that always underestimate the damaging power of irrational (stupid) individuals. They go on to highlight how that same person causes losses to another person while deriving no gain and even possibly incurring losses themselves. But, because that kind of person is so out of the sphere of rational people that they are more dangerous than criminals.
We are at a precipice of decisions that we need to make on our portfolios that are now largely controlled by an irrational person who is attempting to defy the commonly accepted principles of world order and globalization. How we approach the next steps in tailoring our portfolio will determine the direction of our net worth in the years to come.
Much like Maslow’s hierarchy of needs, there is a pyramid of regret. The bottom layer are decisions you are unlikely to regret later. The middle layer is made of decisions that are reversible but become candidates of regret down the road. The final layer is decisions that are impossible to reverse and those that become ones of intense regret.
On Feb 16, 2025 when the S&P 500 closed at 6114, our report was titled “First Sign of a Crack?” following a hotter than expected inflation number. We had concluded that report by stating – “You can’t time the market, but you can time your decisions.” The link to the report is here – https://futurewealthllc.com/
Since then the markets have tumbled to where the S&P 500 now stands at 5074. While we simply could not have predicted the extent of the drop in the stock market, it goes to show why there are always signs that we need to pay attention to, that otherwise, become those that we look back with intense regret.