Trying to predict the long-term direction of the economy based on short-term market movements is exactly how people lose money in the stock market.
If you’re looking decades ahead, reacting to every short-term fluctuation makes no sense. It’s precisely these knee-jerk reactions that destroy returns. Diversification matters, of course - putting everything into US stocks isn’t wise - but avoiding US stocks altogether because of temporary downturns would be equally misguided if not even more so.
There’s a pretty big leap between “reacting to every short term fluctuation” and moving some of my 403(b) investments to holdings in other countries this one time. While of course we can’t predict exactly how the markets are going to head on a given day, i’s really hard for me to reconcile how you can take a look at what’s happening in the Whitehouse today and think anything but more economic pain for the US is on the horizon. Trump is continuing with the same tariff threats that have already spooked the economy, there are large boycotts of US goods underway among our former allies, government spending is being chopped left and right, putting federal workers and many people who work in grant-funded industries into the unemployment column, and there hasn’t even been enough time for anything I mentioned to hit GDP or unemployment numbers.
I’m very confident about moving toward a diversity of investments while minimizing my exposure to the US economy specifically for the short term. I pay no price to make these trades.
Separately, even if I lose a little money, I’d be fine with that, because this is a good damn political statement too.
think anything but more economic pain for the US is on the horizon.
Probably so - but when I speak of investing, my horizon isn’t five years from now; it’s two to three decades from now. On that timescale, the effects of a Trump presidency will appear as nothing more than a tiny dip on the graph. The roughly 7% average annual growth of the (mostly US) stock market already includes events like the Great Depression, the Dot-Com bubble, the 2008 financial crisis, two world wars, and a global pandemic. If the US economy survived all that, I’m confident it will survive Trump too.
Putting your investments in one place and ignoring them for thirty years is certainly one investment method, but it’s a really good idea to rebalance every year or two to align with global trends and your investment goals.
Well, there I disagree. Aligning your portfolio with current global trends is precisely how many people flushed their savings down the drain when the dot-com bubble burst. Diversification is how you protect your investments against that sort of thing - and true diversification means spreading your investments across time, sectors, and geography. At least, that’s what you do if your goal is to make money, rather than a statement.
I’m diversified across many industries across the entire world with reduced exposure to the US. Comparing this to people losing their life savings in the dot com bubble leads me to think you don’t understand what I’m talking about.
I’m talking about reducing your exposure in a region of the world that looks certain to suffer a lag in economic growth for an extended period. Reducing your exposure in Europe during the start of the Euro Crisis in 2010 was a good idea, and I think reducing your exposure to the US for the near term is also a good idea. Keeping your investments steadfastly in one place without regard for the reality of the world around you is foolhardy. Moving your investments between mutual funds within your 401(k) or 403(b) costs you nothing
Trying to predict the long-term direction of the economy based on short-term market movements is exactly how people lose money in the stock market.
If you’re looking decades ahead, reacting to every short-term fluctuation makes no sense. It’s precisely these knee-jerk reactions that destroy returns. Diversification matters, of course - putting everything into US stocks isn’t wise - but avoiding US stocks altogether because of temporary downturns would be equally misguided if not even more so.
There’s a pretty big leap between “reacting to every short term fluctuation” and moving some of my 403(b) investments to holdings in other countries this one time. While of course we can’t predict exactly how the markets are going to head on a given day, i’s really hard for me to reconcile how you can take a look at what’s happening in the Whitehouse today and think anything but more economic pain for the US is on the horizon. Trump is continuing with the same tariff threats that have already spooked the economy, there are large boycotts of US goods underway among our former allies, government spending is being chopped left and right, putting federal workers and many people who work in grant-funded industries into the unemployment column, and there hasn’t even been enough time for anything I mentioned to hit GDP or unemployment numbers.
I’m very confident about moving toward a diversity of investments while minimizing my exposure to the US economy specifically for the short term. I pay no price to make these trades.
Separately, even if I lose a little money, I’d be fine with that, because this is a good damn political statement too.
Probably so - but when I speak of investing, my horizon isn’t five years from now; it’s two to three decades from now. On that timescale, the effects of a Trump presidency will appear as nothing more than a tiny dip on the graph. The roughly 7% average annual growth of the (mostly US) stock market already includes events like the Great Depression, the Dot-Com bubble, the 2008 financial crisis, two world wars, and a global pandemic. If the US economy survived all that, I’m confident it will survive Trump too.
Putting your investments in one place and ignoring them for thirty years is certainly one investment method, but it’s a really good idea to rebalance every year or two to align with global trends and your investment goals.
Well, there I disagree. Aligning your portfolio with current global trends is precisely how many people flushed their savings down the drain when the dot-com bubble burst. Diversification is how you protect your investments against that sort of thing - and true diversification means spreading your investments across time, sectors, and geography. At least, that’s what you do if your goal is to make money, rather than a statement.
I’m diversified across many industries across the entire world with reduced exposure to the US. Comparing this to people losing their life savings in the dot com bubble leads me to think you don’t understand what I’m talking about.
I’m talking about reducing your exposure in a region of the world that looks certain to suffer a lag in economic growth for an extended period. Reducing your exposure in Europe during the start of the Euro Crisis in 2010 was a good idea, and I think reducing your exposure to the US for the near term is also a good idea. Keeping your investments steadfastly in one place without regard for the reality of the world around you is foolhardy. Moving your investments between mutual funds within your 401(k) or 403(b) costs you nothing