Investment Thoughts on Tariffs & Market Turbulence

In times like today, it’s important to remember that investing is a long game. Sure, it’s disappointing to see a drop in our portfolio but ultimately, it will bounce back if you are careful. In the meantime, watch for opportunities to take advantage of an unnecessary drop.

Retirement timing is also critical. Deciding to retire today only works if you built the retirement bucket strategy for safety against market drops. You do not want to withdraw from your portfolio in times like these. It will forever hurt you, in some cases, with low interest, it might be better to borrow. Run the numbers.

The stock market isn’t a zero-sum game, and it’s not what goes up must come down. Have you seen the price of a Big Mac go down? It’s because value goes up over time, and a solid company will grow and survive.

Focus on Quality Companies

Stick to quality companies or a standard index ETF for your portfolio. Take the time to review your investment and the stocks you hold. Ask your friends and family what they think of the companies and their outlook. Don’t be defensive; listen to the perception and then make your conclusion on the business quality.

I qualify my holdings against the tollbooth business concept. I find the tollbooth concept a high quality in a business as it points to recurring revenue. Take Costco as an example. The profit is mainly from the annual membership and delivering value from their products. Costco leverages its buying power to keep prices down and keep customers happy with their membership.

Worldwide Companies vs Country Economies

If you look at my portfolio, you will see that I hold mega cap stocks mostly, and the companies operate worldwide while having roots in the US. I don’t plan to change that at this point (it could change, but not now), and I am not voting with my retirement money.

What companies can do that countries can’t is react, adjust faster to all the changes, and pivot their strategy to benefit the company (i.e., the investors). Yes, sometimes this means a layoff, and that’s unfortunate for some employees, but that’s usually a wise business decision.

I prefer a large Canadian or US conglomerate that will operate worldwide rather than focus on a domestic company. That’s how you get broad exposure and benefit from all the economies and cyclicality of those economies.

To that end, the US megacap stocks tend to fit the criteria I am looking for, and I let those companies handle the fallout of any regulations or economic instability. There are sometimes short-term bumps, but those make for buying opportunities.

If leadership is good, companies are usually ahead of any recession or interest rates difficulties. They will have enough data points to understand trends and pinpoint that a slowdown is coming. It’s not the governments that tell McDonald’s the economy is slowing down; it’s the opposite, and governments are often six months behind.

Have a Long Term Approach

I used to take profits only to realize I would see the stocks keep going higher while the stocks I bought with the profits struggled. I don’t take profits anymore. Not for the sake of thinking that the stock won’t go higher, and I do not say, “There’s nothing wrong with taking profits.” That’s a lame excuse to make an investment decision.

I decided to focus on finding only winners that mirror my winning stocks. What do they have in common? Can you spot them?

If I don’t know what winning stock to buy, I will buy the index to keep it simple. The index beats most stocks anyway—not just any index, but the S&P500.

What About the Dividends?

If you have followed me since the beginning, you know I started with a grandpa portfolio. Yes, that’s what I call it, as it mirrored what most retirees had in their portfolios. I followed the dividend snowball approach until I realized dividend growth stocks eclipsed my dividend snowball.

Keep your snowball going in times like the one we are in, but be ready to optimize and switch to a better option. Here are some of my favorite Canadian stocks.

In some cases, you could be in a position to upgrade to one of those dividend growth stocks if markets pull back hard. What if you could get a 3% yield from one of those big dividend growers? Remember, dividend growth is a percentage.

Ignore World Events

From an investing perspective, you need to keep your focus. World events can be really hard, and everyone takes them in differently. World events are most often short-term events, and investing is for the long term.

Voting with your money means spending money, not investing money. World leaders come and go and don’t last very long compared to businesses and companies. Be very intentional in your decisions. It’s your life, your retirement, and your money. Your choice can mean working an extra five years, and it might be difficult if you are not healthy. It’s a serious decision to vote with your investments.

Readers have been asking me how I will invest with the tariffs and the reality is that I am not doing anything. Is there a quick profit somewhere? Maybe, but that’s not my thing. I am not a day trader and I won’t change my approach. I learned my lesson chasing various strategies when I was starting to invest.

There will be chaos in the short term, primarily due to investors trying to play the market, investors fearing a paper loss, and so on. Still, the companies will adjust and make the necessary shift to overcome the changes.

It’s all part of a healthy stock market!