Trump crashes the stock market: a new opportunity

Reciprocal tariffs for all countries (except Russia and North Korea), even for an island where there are only penguinsThis is the economic news of the week and surely the one that has had the greatest global impact since Covid-19. However, The world's stock markets have reacted with sharp falls, the strongest since the pandemic, as they forecast a reduction in global consumption due to trade barriers.

If we're just starting out with our portfolio, we're likely to panic. 10% drops in one or two days only happen every few years, and such volatility is unusual. However, history tells us that strong companies eventually recover. What's more, sharp declines are often long-term buying opportunities. When we looked at the Ibex-35 during the pandemic at 6,000 points, did we think, what if I had bought here? We're probably at a similar point now. No one knows whether it's necessary to buy today or tomorrow, but in retrospect, declines are an opportunity.

When I talk about perspective, I mean putting the losses of recent weeks into perspective. For example, the American stock market has fallen 21% this year, but it had grown 60% in the last three years and more than 100% since the pandemic. The Spanish stock market will likely also fall 20%, but it was at its highest level in 13 years. In any trend, there are always peaks and troughs, since prices don't move in a straight line; the important thing is that they are upward.

It's common, however, for small investors in this situation to panic and withdraw all their money because "I'll lose everything." Note that, for experts, declines are a buying opportunity, so let's not fall into the trap. If we've overcome a pandemic with the world paralyzed, we'll overcome tariffs.