As Trump's tariffs roil stock market, investment advisors urge caution. Some analysts fear ‘economic armageddon.'
Investors fear that the tariffs will
Financial advisors urge caution, noting that many of the effects are yet to be seen.
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'Right now, there are so many questions,' Catherine Valega, a wealth manager at Burlington-based Green Bee Advisory. 'We're talking about US exceptionalism — is that over? Maybe.'
One analyst worries about a more dire outcome.
'The only positive is you have to believe this will not stay in its current form,' said Dan Ives, a research analyst at Wedbush Securities, based in Los Angeles. 'Because if it stays in its current form, it would be economic armageddon.'
Ives, who specializes in the technology sector on Wall Street, said the tariffs are 'the most absurd thing I've ever seen, period' in his 25-year career. Other investors are just as spooked, he added.
'I'd say it's a panic, it's a crisis, and if this stays in its current form, it guarantees a recession,' Ives said. 'So you have to take the other side and say they can't be that crazy.'
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The 'glass-half-full view,' he said, is that the steep tariffs are just leverage, designed to bring other countries to the negotiating table.
Trump administration officials have stressed, publicly and privately,
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Valega said that the larger investment management firms she works with are still cautious to avoid a panic.
'In theory, things will calm down and and kind of work their way through the system,' she said. 'We're not yet predicting an all-out recession. But the specter is looming.'
Most of Green Bee's clients are young enough that they are willing to weather extended periods of volatility. But the older clients, especially those at or nearing retirement age, are the ones who 'feel the most jitters about this,' she said.
'That's kind of what financial planning tells you,' she said 'You thought you could retire at 62, but the reality is we just took a big hit to our retirement portfolio, so [you're] going to have to work till you're 65 or 67.'
Many of those clients checking their retirement accounts have expressed shock — and bewilderment.
'People don't understand why this needs to happen,' said Alex Burke, an associate at Dedham-based Financial Solutions. 'Not that tariffs came out of the blue; Trump has been talking about them for a while. But it's [more] like, everything was going okay for my clients. And now, it's not.'
Burke said he's been busy assuring clients that, if they've taken the appropriate steps — putting aside an emergency fund, investing in securities with less market exposure, etc. — they should be able to weather the storm.
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'Most of my clients feel that way,' he said. 'It's just kind of scary watching it happen. And frustrating, knowing that it doesn't feel like there's any real reason for this.'
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Nicholas Conaltuono, a financial planner at Needham-based Johnson Brunetti, said those best poised to weather the storm are those who have limited their exposure to market volatility.
'If all your money's in the market, and the market's going up and down, who's in control?' he said. 'Is it you or is it the market? If the success of your plan is predicated on the success of the market, that's not a plan. That's rolling the dice.'
John Ingram, the chief investment officer at Boston-based Crestwood Advisors, said his firm had been fielding constant phone calls from clients all morning.
His advice to the 'nervous types' rattled by plunging tickers? Stay the course.
'It's very hard to trade around this type of news,' he said. 'You didn't know what was happening yesterday when the markets closed, and this morning, it's like a whole new world out there. It's hard to get out beforehand.'
Ingram said that any potential announcements, such as renegotiation of the highest tariffs or a stimulus package for domestic industry, could blunt the worst of the impacts.
'We understand the volatility, we know it's painful, but the main thing is to stay invested,' he said. 'We've taken steps to reduce portfolio volatility, and those seem to be holding up okay. I mean, as well as can be expected.'
That view is somewhat rosier than the alternative, which is full-blown economic meltdown. But Valega said the financial planning industry is, in a way, one that 'warrants optimism.'
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'We help people build long term wealth, and so we sort of have to support our clients in a way that that gives them hope,' Valega said. 'So I'm not there [worrying about a recession] yet.'
'But again, I don't know,' she added. 'I might wake up tomorrow and be like, 'Oh God, now we're off the cliff.''
Camilo Fonseca can be reached at
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