It’s understandable that the news about Trump’s 25% tariffs on Canadian goods have some feeling nervous about their investments and the economy in general. When you hear about these kinds of geopolitical shifts, it’s easy to imagine a market meltdown. But, let’s take a step back and look at this from a broader perspective to put your mind at ease.
Geopolitical Noise and Market Volatility: A Temporary Hiccup
First things first, while these tariff changes may cause short-term volatility in the market, it’s important to remember that geopolitical events like this come and go. Historically, these types of disruptions tend to create temporary fluctuations, but the markets have a way of stabilizing once the immediate uncertainty fades. For long-term investors, these bumps in the road are often more about noise than substance.
A Diversified Portfolio Is Your Best Protection
A well-diversified portfolio is one of the best ways to protect yourself from market volatility, especially when facing geopolitical disruptions like tariffs. While Canada may experience some short-term turmoil due to these changes, many of the investments in your portfolio are tied to companies and sectors around the world. This global diversification reduces the risk of putting all your eggs in one basket.
Even if one country or region faces a setback, a diversified portfolio—spread across various sectors and geographical areas—helps cushion the impact. By holding a mix of assets that aren’t solely dependent on one economic environment, you’re more likely to ride out the volatility without seeing dramatic losses.
Active Management: Helping Protect and Grow Your Investments
Active management is another key strategy to protect your investments and capitalize on new opportunities. Instead of simply letting your portfolio ride out the storm, we work with global asset management teams to actively monitor and adjust your portfolio.
These asset management teams use tools like Exchange Traded Funds (ETFs), Mutual Funds, and Hedge Funds to manage risk and seize opportunities as market conditions shift. Their expertise allows us to respond quickly to changes, protecting your investments during downturns while identifying potential growth areas in evolving market environments.
The Dangers of Trying to Time the Market
Finally, it’s worth noting that trying to “time” the market—selling investments in fear during times of turmoil and hoping to buy back later—can actually end up costing you money. Studies show that investors who make moves based on short-term market movements often miss out on the market rebounds. In fact, staying the course has proven to be a much more effective strategy for long-term success.
One study found that over a 20-year period, the S&P 500 had an annual return of 8.4%. However, if you missed just the 10 best-performing days during that time, your return dropped to just 5.5%. The lesson here? Staying invested, even during periods of volatility, is one of the best ways to ensure you don’t miss out on the long-term gains that are often just around the corner.
While it’s natural to feel uneasy about current events, remember that a well-diversified portfolio, combined with active management, provides the tools we need to navigate through these uncertain times. The market will experience ups and downs, but as long as you stay focused on the long-term, your investments will continue to work for you, regardless of temporary disruptions like tariffs.
At Harmer Wealth Management, we’re here to help guide you through these times with confidence and strategy. If you have any concerns or questions, feel free to reach out—let’s talk about your portfolio and how we can continue to help you achieve your financial goals.
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