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Yahoo
3 days ago
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- Yahoo
If you're feeling FOMO, envy and greed about record stock prices, you're not alone. That's how market bubbles form.
Some stock-market contrarians reassuringly say that investors' current concern that the S&P 500 SPX, the Dow Jones Industrial Average DJIA and the Nasdaq COMP are all forming a frothy U.S. market bubble is exactly why the market isn't in one. But a market bubble can materialize even when most investors are worried about one. Like now. A recent Bank of America fund-manager survey found that a record 91% of survey participants believe the stock market is overvalued, and Google Trends shows a sizable increase in recent weeks in the number of finance-related searches focusing on bubbles, as you can see from the chart below. 'I am a senior citizen': My car needs $3,500 for repairs, but only has a trade-in value of $6,000. Do I bother fixing it? Clash of the titans: The hottest momentum stock meets the most notorious short seller When it comes to bubbles, contrarian analysis typically gets it wrong. An analysis of past bubbles suggests not only that widespread concern about bubbles is consistent with one forming — such worry actually plays a central role in a bubble's latter stages. Consider the definition of bubbles from Robert Shiller, the Yale University finance professor who won a Nobel prize in large part because of his research into stock-market bubbles. In his 2000 book 'Irrational Exuberance,' Shiller wrote that a bubble is self-perpetuating: 'News of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increases and bringing in a larger and larger class of investors.' Shiller added that these newcomers, 'despite doubts about the real value of an investment, are drawn to it partly through envy of others' successes and partly through a gambler's excitement.' Notice from Shiller's description that bubbles involve a high degree of cognitive dissonance: Despite concern about stocks' overvaluation, investors bet heavily on equities. This dissonance is readily apparent in the Bank of America survey, for example: Even though 91% of survey respondents say that stocks are overvalued, they on balance are more bullish than they've been in months. Investors resolve the dissonance by telling themselves they will know when the bubble is about to burst and get out in time. But the history of bubbles teaches us that this belief represents a triumph of hope over experience. It's simply the greater-fool theory in disguise. AI illustrates how quickly a bubble can burst. Earlier this week the company reported preliminary results for its July quarter that fell far short of analyst expectations, and its stock plunged almost 26% in a single session. It's true that significant differences exist between the current market and the top of the internet bubble, as Daniel Newman, CEO of the Futurum Group, recently argued in a MarketWatch column. But no two bubbles are alike, and the existence of differences between today and early 2000 doesn't mean we're not in a bubble. As I recently pointed out, 10 time-tested valuation indicators show today's stock market to be more overvalued than those at any other time in U.S. history. Benjamin Graham, the father of fundamental analysis and author of the investing classic 'The Intelligent Investor,' made fun of the greater-fool theory by telling a joke, which Warren Buffett of Berkshire Hathaway retold in his 1985 shareholder letter: 'An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. 'You're qualified for residence,' said St. Peter, 'but, as you can see, the compound reserved for oil men is packed. There's no way to squeeze you in.' After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, 'Oil discovered in hell.' Immediately the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. 'No,' he said, 'I think I'll go along with the rest of the boys. There might be some truth to that rumor after all.' ' The bottom line? Contrarians are wrong in thinking a bubble can't be forming just because there is widespread current concern about stock-market overvaluation. Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at More: 10 stocks with recently increased dividends — and why they merit a closer look Also read: Why your stock portfolio may actually 'feel' depressed that summer is almost over 'Am I delusional?' My wife and I are in our 50s and have $11 million. We're not leaving it to our kids. Is that wrong? CoreWeave's lockup is about to expire. What that could mean for the stock.
Yahoo
03-05-2025
- Business
- Yahoo
‘Retirement is within my grasp': I'm 57, my 401(k) is dropping and I'm feeling anxious about a recession. What can I do?
It looks like a recession is on the horizon. Surely the time has come to take action. I've noticed you've been giving people advice on what to do or, more precisely, what not to do in the weeks and months since the election of President Donald Trump and his announcement of tariffs. I don't pretend to understand all the details, but I do know that the market has suffered and, along with it, my 401(k). I'm 57, and retirement is within my grasp. The economy appears to be slowing down. What can I do, if anything? I feel like I'm fiddling while Wall Street burns. Warren Buffett proves, once again, why he's the best 'We are the most privileged': My husband and I are tired of paying for our friends. How do we get them to pay their way? 'Retirement is within my grasp': I'm 57, my 401(k) is dropping and I'm feeling anxious about a recession. What can I do? My father is giving me $250K to buy a home, but told me not to tell my two siblings. Am I morally obligated to tell them? My eldest son refused to share his father's $500K inheritance with his siblings. Should I cut him off? That is dramatic language, but I would be less anxious if I was in my 30s or 40s. I'm looking for a roadmap. My friends say, 'Sit tight,' except for one who constantly goes on about checking his 401(k) and, sorry to say, that makes me feel even worse. I feel like every morning I wake up, wonder what's next, turn on the news or open my laptop, and there's more bad news. Give me five things I can do right now, and I won't blame you if they don't pan out. 50-something Related: Americans are 'doom buying' coffee, olive oil and soap. What's the one thing I should stockpile to avoid tariff price hikes? Wall Street isn't burning. It's processing. It's processing news — and responding accordingly. You're correct about the facts, as we know them. Your feelings and predictions can be managed separately. Gross domestic product contracted at a 0.3% annual rate in the first three months of 2025, the government announced Wednesday. This marks the first contraction in the economy since early 2022 and markets are, perhaps understandably, spooked. The S&P 500, Nasdaq COMP and Dow Jones Industrial Average DJIA get spooked on a regular basis. We're not in a recession. At least, not yet. 'The decline in GDP in the first quarter overstates the economy's weakness, but it is weak,' Moody's chief economist Mark Zandi said Wednesday. 'The threat of tariffs and DOGE cuts weighed heavily on the economy in the quarter. Most worrisome is the weak growth in consumer spending, and that is despite the boost to buying as consumers rushed to get ahead of the tariffs. The economy isn't in recession, but is on the precipice.' Most analysts see a recession as more likely than not. Some 60% of economists polled — 101 out of 167 — said the prospect of a recession this year was either high or very high, while 66 said it was low, according to a Reuters poll. Another poll of 41 professional business forecasters by the National Association for Business Economics said half of the participants place the probability of recession this year at 25% to 49%, while 37% put it at 50% or higher. Recessions come in all shapes and sizes. Over the last 80 years, there were 24 corrections in the S&P 500, with average market declines of 14%, according to IG Wealth Management. It usually takes around five months for a correction to reach its lowest point. Market crashes — defined as 'a sudden and drastic downturn across a major cross-section of a stock market' — are even rarer for the S&P 500, having happened only 13 times since 1950. Larger crashes of 30% or more are extremely rare: There have been six of them since 1950. Don't miss: America's job market is eerily similar to the 1990s dot-com bubble — and, yes, it's a worry 1. Stay invested for the long term. That is an action, and 'long term' means the next 10 years and the decades of your retirement. Remember that you won't cash out all your stocks on the day you retire. You will be making withdrawals from your 401(k) and, at some point in the future, claiming Social Security benefits. The clue is in the name: Your retirement funds should remain intact during your retirement. You could live to 80 or 90 or beyond, so you have many years ahead. 2. Save money in an emergency fund so you can handle the unexpected: a job loss, a health event or a new roof. During uncertain times, it's smart to have enough funds to cover at least six to 12 months' worth of expenses readily accessible, either in a high-yield savings account or a checking account. This also gives you something invaluable during a recession or stock-market downturn: peace of mind. 3. Buy what you need and don't panic and start stockpiling canned vegetables, olive oil or soap. But if you need a car for work and your current vehicle is on its last legs, this might be a good time to buy a new one. Americans — at least those who can afford to — are buying more cars, with new-car sales up 9% year over year to 1.59 million units in March as people rushed to upgrade before the new tariffs took effect. 4. Consult your financial adviser about your long-term retirement plan and review your portfolio. People in their late 50s should probably have roughly 60% of their savings in equities, 35% in bonds and 5% in cash. According to the '120 minus age' rule, you can subtract your age from 120 to determine what a sensible weighting in equities would be. (There's also the '100 minus age' rule, so opinions differ. It's a guide.) 5. Keep your faith and don't underestimate the U.S. economy. We've seen challenging times before, including the pandemic, the 2008 subprime-mortgage crash and the 2001 dot-com bubble. Trump inherited, by most measures, a strong economy from former President Joe Biden. Inflation had cooled, with the consumer-price index currently running below 3%. Unemployment was 4.2% in March. The labor-participation rate is over 80%. Don't miss: Trump's trade war has rattled investors — uncertainty is a call to action Whether you're concerned about a recession or a stock-market crash, it's natural to be nervous about the future, especially as you get older. Analysts suggest investing in consumer staples, along with real-estate investment trusts, healthcare and utilities. The financials sector may benefit from looser regulation. You wouldn't be human if you didn't care, but try to avoid using inflammatory language. It won't help you, and it won't help others when you share those worries. The past is a good indicator of the future. The last 15 recessions — roughly defined as two consecutive quarters of negative GDP — produced negative returns for 17 months on average, according to Russell Investments, with an annualized cumulative decline of 14.8% and an average drop in gross domestic product of 4.6%. A market correction, as you are probably aware, is a fall of 10% from a recent peak, and a bear market is defined as a 20% fall from a recent high. But the bull markets that follow market crashes are typically very long, IG Wealth Management says: 'During the early months of the COVID-19 pandemic, the S&P 500 SPX fell in value by 34%. The S&P 500 bounced back to its previous highs by November of 2020, taking around 8 months to fully recover, and had a gain of 15.6% by the end of the year.' For that reason, it's important to remain diversified and to look for opportunities for investment — but to avoid trying to time the market. Your mental health, after all, is as important as your financial health. When you wake up tomorrow, instead of turning on your laptop or TV, go for a walk. Clear your head. Plan a vacation or some activities, or get together with friends but make a pledge that you won't talk about your 401(k), the markets or whether a recession will happen. Some things are out of your control, but your long-term goals, along with your retirement, are still within your grasp. Inaction is sometimes overrated. Don't miss: I've made the most money over the last 30 years buying solid companies in terrible markets': Should I start buying? More columns from Quentin Fottrell: My portfolio lost 20%. With Trump's tariffs, do I sell stocks and buy gold? 'I'm not being a troll': I bought 'DJT' stock and I'm down 50%. What now? 'I have an out-of-state adviser in a Republican state': How can I tell if his political views influence his investment advice? Wall Street could be facing a long bear market, this viral report warns. Here's how investors can prepare. Markets are dealing with a new kind of shock. The S&P 500 might not have bottomed yet, says Goldman Sachs 'She's kept him afloat': I'm 78 and leaving my daughter, 41, my life savings, but her partner is a mooch. How can I protect her? Stock market's post-GDP whiplash shows it's 'foolish' to expect anything but volatility Trump's tariffs are America's Brexit, says this strategist. These are the trades to make. Sign in to access your portfolio
Yahoo
14-04-2025
- Business
- Yahoo
Experts now recommend a 12-month emergency fund. Here's how to quickly save thousands in cash.
Many personal-finance experts were already warning that a cash emergency-savings account covering three months of necessary expenses in case of unemployment was likely too little for today's job market — recommending a six-month buffer instead. Now, as President Donald Trump's tariff plans increase economists' expectations of a recession and sent the Nasdaq COMP and Russell 2000 RUT stock indexes dipping into bear-market territory last week, some financial planners are suggesting bumping up those savings to cover a whopping 12 months of necessary expenses, and say it needs to happen quickly — especially if you are in an industry or occupation that has few job openings or are the sole earner in your household. I held power of attorney for my late brother. Can I withdraw money from his bank account to give to his favorite charity? Treasury yields are surging despite market chaos. This isn't normal — and it worries Wall Street. Here are this week's 20 best-performing stocks as the S&P 500 rallied My tenant convinced me to take out a $175,000 home loan to buy stock — then he stole my home I'm administrator of my sister's estate. Her bank won't tell me the names of her beneficiaries. Is that legal? Moody's Analytics Chief Economist Mark Zandi put the chance of a recession at 60% even after Trump announced a 90-day pause on 'reciprocal' tariffs for dozens of countries. The markets rebounded briefly this week, but if the president doesn't change course on tariffs in the next four to six weeks, 'we're done,' Zandi told MarketWatch. 'I suspect by June, we will see job loss.' Goldman Sachs, meanwhile, sees a 45% probability of a recession. Even after the pandemic-induced downturn in 2020, 'markets bounced back, and things were a little bit more clear in terms of what was going to happen within a couple of months,' said Michael Scarpati, chief executive of financial-planning platform RetireUS. 'This is just, every day, 'What's going to happen?'' He noted that it is taking, on average, nearly six months for unemployed people to find jobs. Having cash is especially preferable during periods of market volatility like we are experiencing now, he said, and tariffs will likely lead to cost-of-living spikes that will be easier for households to manage with bigger savings. 'Twelve months [of savings] is very wise, if you can do it,' Scarpati told MarketWatch. Cat Irby Arnold, the Washington state market leader at U.S. Bank, also recently told MarketWatch that a one-year emergency fund is 'ideal.' And personal-finance host and author Ramit Sethi recommended building a 12-month emergency fund in a social-media video last week, an 'extreme' recommendation that he also made during COVID-19. 'Start cutting discretionary spending now, before the world forces you to. That's how you protect yourself and position yourself to be ahead when things stabilize,' Sethi wrote in his newsletter. Yet this advice is aspirational for the average American. In a May 2024 survey by Bankrate, just 28% of people had at least six months' worth of expenses saved; 16% had between three and five months' worth of expenses saved; 29% had less than three months' worth saved; and 27% had no emergency savings at all. Saving enough to live on for an entire year is never easy, especially for low- and middle-income households. People who are worried about losing their jobs soon may worry they do not have enough time to get their savings in order. But 'people can change their lifestyle because their priorities have changed' and understand that it is only temporary, Spenser Liszt, a financial planner with Motif Planning, told MarketWatch. If you're in the 'better safe than sorry' camp and are ready to make some serious — but temporary — budget cuts, here are some tips from personal-finance experts on how to add thousands of dollars to your emergency fund in the near term, as well as estimates of how much you could hope to save. When possible, the figures provided are the averages for households with kids. The average tax refund so far this year is $3,170, data from the Internal Revenue Service shows. This year, the most common way people plan to use their refund is for savings: 49% of people surveyed by the National Retail Federation said they planned to save it, compared with 28% last year. The fastest way to boost your emergency savings is to find other sources of income, said Liszt, and it's become a very common tactic. In a recent LendingTree survey, 40% of respondents had side hustles, and the median earnings from these jobs were $400 per month. Common side hustles included food or grocery delivery, online freelancing and part-time or seasonal work. About 18% of survey participants said having an extra job was a short-term fix for financial security. Dining out and ordering meals in are 'usually the biggest expenses that can be curbed by simply making a small lifestyle change,' said Jonathan Barrett, a financial planner with Barrett Financial Solutions. The average couple with kids spends about $500 per month eating out, while single people spend about $200 eating out, according to the Bureau of Labor Statistics. Couples with children spend $3,000 per year on apparel, according to BLS data. Kids grow and need new clothes, but for just a few months, lean on your local 'buy-nothing' groups and hand-me-downs from family and friends until your emergency fund is where you want it to be. These households also spend about $1,200 per year on personal-care products like shampoo, cosmetics and shaving products. This often includes impulse purchases that can be sourced instead from buy-nothing groups or put off until their savings are in order. One consumer previously told MarketWatch that in order to incentivize herself not to shop, she records the costs of all the things she considered buying but didn't, and sets aside that money instead. Couples with kids spend about $5,400 per year, or an average of $450 per month, on entertainment — a category that includes sports, lessons, movies, club fees, equipment and gear, toys and pets, BLS data show. Hit pause on those activities for a few months and save that money. It won't be forever. After you've eliminated your dining-out budget, it's no fun to also reduce your grocery spending — but again, if you decide your priority is to save as much as possible in a short period of time, groceries are another place in the budget to find some wiggle room. The average U.S. household spends about $6,000 each year on groceries, but the lowest-income households spend just $3,700. The difference averages out to about $200 per month. From the archives (April 2024): You're paying a lot more for food these days. Here's how to save money on groceries. This wouldn't be the first place to cut back — retirement savings are really important — but if you think you might lose your job, you can temporarily divert a portion of your retirement contributions to your emergency fund. If you're funding your 401(k) at a level higher than your employer's matching contributions, 'you can cut it back to the match,' Brian Preston, author and co-host of the Money Guy Show, told MarketWatch. The most common match formula on Fidelity plans is based on a 5% contribution rate (matching 100% on the first 3% and then 50 cents on the dollar on the next 2%). Employees in Fidelity's data contributed an annual average of $8,800 at an average rate of 9.4% last year. By temporarily reducing their contribution rate to 5%, they could still get their employer match while redirecting roughly $350 each month toward emergency savings. This may not be an option for the minimalists out there, but if you've got a lot of stuff sitting unused in your home, think about how much all of it is worth. Selling a few big items — bikes, electronics, furniture, tools, maybe even a car you never use — could get you to your savings goal a lot faster. You could set a goal for how much you want to raise from reselling — for example, $300 per month. 'Everyone's different, but you might have collectibles, or a bunch of gear, or something from your past life' collecting dust in your garage, Liszt said. 'You could have a big haul right in your own home.' What personal-finance issues would you like to see covered in MarketWatch? We would like to hear from readers about their financial decisions and money-related questions. You can fill out or write to us at . A reporter may be in touch to learn more. MarketWatch will not attribute your answers to you by name without your permission. Investors are shunning America. This wealth management giant says, actually, U.S. stocks are attractive. 'In their last days, our parents changed their will': They left me $250,000, but gave my sister $1 million. What should I do? Nasdaq set to lead Dow, S&P 500 higher on tech tariff pause amid mixed signals 'I've made the most money over the last 30 years buying solid companies in terrible markets': Should I start buying? 'He gave me a week to get out': My son and I bought a house — now I'm homeless and living in a car. Can I sue him? Sign in to access your portfolio
Yahoo
11-04-2025
- Business
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Should I rush to take my RMD while the S&P 500 is down, or wait until the end of the year like normal?
Waiting for a full bounce-back from the stock market after a downturn is hard when you know you have a pending transaction. If you're over the age of 73, at some point this calendar year you have to take money from tax-deferred accounts as required minimum distributions (RMDs). Some younger retirees are in the same boat, not because the government insists, but because they need to take out regular amounts from IRAs or 401(k)s for living expenses. Knowing when to take those withdrawals in any given year has always been something of a guessing game. Some of this is personal preference, and some is governed by maximizing tax efficiency, because the amount that comes out is considered ordinary income for the year. Most people wait until the end of the year to have a better sense of their overall tax situation so they don't push themselves into a higher tax bracket with the income. Meanwhile, some people take a lump sum at the beginning of the year, and some take monthly or quarterly draws. 'This is not in my tolerance level': I inherited a $600K portfolio from my father. Should I move it all into bonds? Investors are shunning America. This wealth management giant says, actually, U.S. stocks are attractive. Punishing bond-market selloff likely forced Trump's 90-day tariff delay: former J.P. Morgan chief strategist Bond-market chaos is fueling concerns about a crisis. Here's what you need to know. Top strategists say stock market still bogged down by tariff uncertainty despite Trump's pause This year is different from any other investors have faced, with extreme volatility and an overall decline in the S&P 500 SPX and other indexes like the Nasdaq COMP and Dow Jones Industrial Average DJIA so far. If you are facing a withdrawal, you might have an itchy trigger finger and be wondering if you should just take your RMD or yearly withdrawal now, while the market is still down. Advisers always say that down markets are good for Roth conversions, because you're basically getting a sale on the investments once you move them to the Roth account. You might think the same logic would apply to make it advantageous for RMDs, too. But there's a key difference, which is that when you move money from a tax-deferred account into a Roth account as a conversion, the future growth is tax-free. When you take out your annual RMD or other regular withdrawal, you're either putting the money into a taxable account or spending it. The income goes on your balance sheet and any loss gets locked in, plus any future growth is subject to tax along the way for dividends and capital gains when you sell. 'I actually view the two actions — taking an RMD and doing a Roth Conversion — from different perspectives, and end up using different assets in an IRA for each one,' said George Gagliardi, a certified financial planner based in Massachusetts. For a Roth conversion, he wants to move investments at a low that has the best chance for big appreciation. For a regular withdrawal, like for an RMD, he wants to use a short-term bond or other asset that has dropped the least, so that it is essentially closest to its maximum cash value when it leaves the account. To understand the difference, it helps if you don't think of a portfolio as a monolith — like worrying 'my portfolio is down' because the S&P 500 is tumbling, when your actual holdings may not directly correlate to that index. 'Your portfolio has many parts; don't think of it as one stable unit,' said Rob Williams, managing director of financial planning at Schwab. 'Most retirement portfolios have some allocation to cash — like 5%, but it varies — and then short-term bonds or bond funds, and maybe intermediate bonds, and then diversified stock.' One problem that Williams pointed out is that if your retirement portfolio is devised so that the next few years of RMDs are kept in less risky investments, like Treasury bonds BX:TMUBMUSD10Y or CDs, you could face a logistical hurdle to rushing a withdrawal. Most fixed-income ladders are set up in multiyear tiers set to come due when you expect to need the cash — likely in November or December of each year for the next five to 10 years. If you decide you want the money early, then you would be in a position to sell other investments in the account instead — and then you'd face the situation of this client from Wealthramp, a service that matches people with fee-only financial advisers. A 74-year-old retiree has a traditional IRA that was worth $850,000 at the end of 2024. That's the balance used to calculate her 2025 RMD, which comes out to roughly $33,000 based on her IRS life-expectancy factor. Now, in April, the market has dropped and her IRA balance is temporarily $790,000. If she takes her RMD now, she'll still be required to withdraw $33,000, but because her portfolio's value has dropped, she'll have to sell more shares at lower prices to generate that same dollar amount. 'That's the problem: She's selling low to meet a requirement based on a high. It's a double negative — and a classic pitfall for retirees who act too quickly,' said Wealthramp founder Pam Krueger. One caveat to consider is if you're dealing with an inherited IRA, rather than a retirement account, and you are on a timeline to empty the account in 10 years. These accounts still face RMDs in those 10 years, and nonspouse inheritors have to manage the withdrawals with their own tax liability. Scott Bishop, a wealth manager based in Texas, just had a client ask about speeding up his withdrawals while the market was down. What Bishop explained is that while he has done many Roth conversions during down markets, getting tax benefits from a withdrawal without the conversion is trickier. If you're just reinvesting the money, rather than spending it, he suggested selling investments in the IRA, and then transferring the cash (after tax withholding) to a brokerage account. Then put that money to work in areas you think will rebound the best — which can be hard to figure out right now, given the volatility at the moment. Bishop said the benefit to this would be that you pulled the money out at a lower tax level, so it's tax-smart when it comes to paying ordinary income. Also, you're reinvesting into areas that you hope will grow eventually and only cost capital-gains rates rather than income-tax rates. 'This could reduce your tax burden from 30%-plus to 15% to 20%, which is a good tax arbitrage,' Bishop said. Any dividends you earn may also be at qualified dividend rates, rather than taxed on the way of the inherited IRA at your ordinary income-tax rate. All of this can also be achieved a few months from now, on your regular schedule, or depending on which way the markets go from here. The one thing you can count on for all of 2025 is that your baseline RMD amount is not going to change no matter what the stock market does; that was set in stone on Dec. 31, 2024. 'So don't rush to sell assets at depressed values,' said Kreuger. 'Waiting gives your IRA more time to recover, and lets you defer taxes a little longer.' The stock market may be soaring, but here's where the sellers are likely waiting 'I'm stuck': I'm a single mom with a 6-year-old child. What can I do to earn money fast? The S&P 500 is plunging after having its 10th best day ever. How to navigate volatility. Stock-market extremes are the norm now. 'The key is to not get emotional.' 'She has been telling him lies': My sister convinced my father to sign everything over to her. What can I do?
Yahoo
07-04-2025
- Business
- Yahoo
‘I cannot afford to lose more': Will Trump's ‘liberation day' tariffs hurt my retirement?
. With all that's happening in the world — including the U.S. trade war — what will or could happen in April with the U.S. markets? Should I sell some of my stocks to slow the losses recently taken? I'm in my 60s and plan to retire in 3 years. It may take longer to recover my losses. I cannot afford to lose more. Stock futures plunge as ugly stretch for Wall Street looks set to worsen U.S. stocks aren't a screaming buy just yet — but we're getting close. Here's what to watch. I'm the executor of my mother's will. She left $160,000 in a secret savings account. Should I tell my siblings? U.S. stocks see biggest 2-day wipeout in history as market loses $11 trillion since Inauguration Day 'She has been telling him lies': My sister convinced my father to sign everything over to her. What can I do? Soon-to-be Retiree Related: I invested $100,000 in the S&P 500 in February and lost $10,000. How long will it take to recover? You have 3 years or more before retirement. Plus, you should be earning returns on your investments during your retirement, too. On Wednesday, President Donald Trump made a speech about his new taxes on imported products, a day the president dubbed 'liberation day.' 'We're going to start being smart and we're going to start being very wealthy again,' he said. More clarity on the road ahead should, in theory, allow investors, politicians and corporate bigwigs to plan for a new normal where formerly close trading partners — China, European Union, Canada and Mexico, among them — navigate a more adversarial era of tariffs. If I told you to sell, and we entered a prolonged recession, you'd thank me. If I told you to sell, and world leaders figure out a path ahead on tariffs and trade, leading to the market bouncing back, you'd curse from here to kingdom come. I'm not going to tell you to sell. Nor am I going to tell you not to sell. I do believe it would be a mistake to take your money off the table at these latest movements in U.S. stocks. As the markets reel, Trump said these tariffs are designed to restore 'fair' trade for the U.S. Try to be as sanguine about the dips in the Dow Jones Industrial Average DJIA, S&P 500 and Nasdaq COMP, as you perhaps have been about the bull market over the last 10 years. Remember, the potential pullback in corporate investment — production, hiring etc. — on the back of an international trade war has led to the recent selloff on Wall Street. But remember too that this comes after a decade of healthy growth for the U.S. stock market, with the exception of 2015, 2018 and 2022. To answer your question, I would need a crystal ball — and even then, I'm not sure the dark arts would produce an answer. But the turmoil in the market is also what will help you. The U.S. stock market does not go in just one direction. It goes up and it goes down; and, if you give politicians, business leaders, investors and economists the time they need to process recent events, you will rest easier. Tariffs can be both a negotiating tactic and blunt economic policy; no one is quite sure of the balance. Instead, we have to rely on economists' art of predictions for the year ahead. Three years is a long time in politics and finance, and equally difficult to predict. Thus far, we have a cacophony of fear, noise, political machination and wildly fluctuating estimates. We have been here before many times over the last 10 years, with market corrections, changes of administrations, threats of trade wars and even a global pandemic. Throughout all of that, the market has abided. I'm loath to predict what will happen, but Goldman Sachs GS has given it a shot (sort of). It predicts that the S&P 500, which has already entered correction territory (a 10% drop from a recent peak), will fall 5% over the next three months. It does not expect the S&P 500 to trade as high as its recent record level of 6,000 for the rest of this year. Instead, it sees the index trading at between 5,300 and 5,900. The bank to cut its S&P 500 EPS growth forecasts to 3% in 2025 from 7%. Still, there are notes of optimism for the year ahead from some economists, even if they do come wrapped in a red bow of caveats. 'Tariff uncertainty, persistent inflation, waning consumer confidence and moderating earnings growth expectations are weighing on investor sentiment as the first quarter draws to a close,' according to U.S. Bank Wealth Management. 'Despite tariff-related headwinds, there remains much to like about equities.' The bank's strategists point to market valuations that, while high, are short of extreme elevations; stable, if elevated, interest rates; plus relatively steady earnings projections for 2025, despite a spate of corporate leaders trimming their outlooks. All of the above, U.S. Bank USB adds, reflect 'robust' year-over-year growth. U.S. markets, however, are set to have a choppy time this week as investors digest the tariff news. Related: 'I'm not trying to be overly doomsdayish': My grandmother is in her 70s and has $400K in stocks. Is it time to sell? The Conference Board's Consumer Confidence Index hit its lowest level since January 2021, however, while the Michigan Consumer Sentiment Index reached lows not seen since November 2022. 'Investor sentiment is transformed for now,' U.S. Bank adds. Through March 31, 2025, equity markets as measured by the S&P 500 are down around 3% since Nov. 5, 2024, and 4.6% for the first quarter of 2025. Citing Trump's tariffs, including a 25% on imported automobiles and auto parts, Yardeni Research is also toning down its 'roaring 2020s' estimates, raising the chances of a stagflation — persistently high inflation coupled with slower economic growth and higher unemployment — to 45% from 35%. That includes the possibility of a 'shallow recession' later this year, following a buy-in-advance shopping spree during April and May,' it said. A sliver of a silver lining: 'We still expect that the roaring 2020s scenario will prevail over the remainder of the decade, as it has so far, but after 6 to 12 months of heightened stagflationary risks for now,' Ed Yardeni, president of Yardeni Research, says. 'So we are lowering our outlook for S&P 500 earnings per share and our S&P 500 SPX stock-price targets for 2025 and 2026. We are still targeting 10,000 for the S&P 500 by the end of the decade.' Economists, for the most part, don't like tariffs, mainly because they push up the cost of goods, and encourage C-suite executives to adjust their more bullish outlooks. 'A happy outcome would be that the U.S. would negotiate tariff reductions, but that won't happen if the U.S. slaps a 20% tariff on all imports across-the-board,' Yardeni says, 'just because Peter Navarro has convinced the president that tariffs will bring $6 trillion in revenue over the next 10 years.' That said, I hope you have a balanced and diverse portfolio. In your 60s, you should have between 30% to 50% in equities, with the rest held in bonds and, perhaps, 10% or so in cash for emergencies. The closer you get to retirement, the more you should hedge your exposure to equity markets. Of those stocks, T. Rowe Price suggests 60% in U.S. large caps, 10% in U.S. small caps, 25% in developed non-U.S. stocks, and 5% in emerging markets. 'Retirement can last up to three decades or more, meaning your portfolio will still need to grow in order to support you,' T. Rowe Price says. 'Exposure to stocks should remain an important part of your allocation target, even in retirement. However, a possible need to access these assets for income in the near term means you are more susceptible to short-term risks. That's why it's important to position your portfolio to add more exposure to bonds and cash.' That doesn't help assuage your immediate concerns. You, like millions of baby boomers, are planning to retire soon. My golden rule for retirement and life: Don't put yourself under unnecessary pressure to get to the bank by 3 p.m., if you can attend to your business tomorrow, and don't put stress on your shoulders by viewing your life as a countdown over the next three years to retirement. Life will throw us tariff wars or property crashes, so it helps to be flexible. Few retirees, I imagine, can afford to lose money, but you can't go against the laws of physics. The world will continue to rotate on its axis and, in addition to introducing more flexibility to your retirement plans, you would benefit from maintaining some mental and emotional tractability. The more flexible you are in your mind and in your financial plans, the more resilient you will be in your approach to swings and roundabouts in the markets. Economic calendar: Watch this week for manufacturing, construction and jobs data Will Trump's policies lead to a recession? I'm 62 and earn $50,000 a year. How should I invest $100,000? 'She has been telling him lies': My sister convinced my father to sign everything over to her. What can I do? My father died, leaving everything to my 90-year-old stepmother. Do I have a right to ask her if I'm in her will? Bill Ackman warns of 'economic nuclear winter,' urges 90-day timeout on tariffs 'I'm stuck': I'm a single mom with a 6-year-old child. What can I do to earn money fast? 'I'm sweating': I bought Trump's 'DJT' stock and I'm down 50%. What should I do now? 'I'm looking to buy what I hope is my final home': Will Trump's trade war lead to a fall in house prices? S&P 500 targets are being slashed. But for one analyst, there's another big worry beyond tariffs.
