"Trump's Market: What to Do While Waiting for the Green Light"

Ladies and gentlemen, the market is a rollercoaster right now, and we're all waiting for the big man himself, Trump, to say "enough is enough." But while we're waiting, you can't just sit on your hands! You need to be proactive, strategic, and ready to pounce when the time is right. So, let's dive into what you need to do to navigate these choppy waters and come out on top.



First things first, PROTECT YOURSELF WITH A "BUFFER"! You need to be mindful of your expected portfolio withdrawals during this "danger zone" time period. If you have spending needs in the next 3-5 years, build a Liquidity strategy portfolio with resources (cash, bonds, and borrowing capacity) that are dedicated to meet these needs. During a market drawdown, tapping into your Liquidity strategy resources—rather than selling your long-term assets and thus locking in otherwise-temporary losses—can help you to boost your portfolio's return potential. This is especially true if you have a short-term spending goal—such as a quarterly tax payment—that would otherwise require you to realize capital gains taxes from selling a portion of your portfolio.

Next up, REBALANCE AND POSITION TACTICALLY! During the most recent sell-off in US stocks, we've seen relative outperformance from other asset classes. For example, even as NASDAQ has fallen about 2% year to date, we've seen a 3% total return from bonds, a nearly 10% rally in international developed market stocks, and an 11% rally in gold prices. After these divergent returns, it's likely that your portfolio's asset allocation is no longer where it started at the beginning of the year. We would recommend that you rebalance back to your target allocation.

In addition to rebalancing, you should consider tactical adjustments that will help you mitigate downside risks. For example, gold and silver can help you to manage geopolitical risks; structured investments can help you to tap into an equity market rebound while incorporating a level of capital protection; and an allocation to hedge funds can help your portfolio navigate volatile markets.

Now, let's talk about HARVESTING TAX LOSSES! If you have unrealized capital losses in your portfolio today, talk with your financial advisor about realizing them promptly. Markets tend to go higher over time, and losses tend to be short-lived, so the best way to implement tax-loss harvesting is to make small trades in the portfolio throughout the year as opportunities present themselves.

And don't forget about PARTIAL ROTH CONVERSIONS! A Roth conversion involves transferring funds from your pre-tax Traditional IRA or 401(k) into a Roth IRA or Roth 401(k). You will need to pay income taxes on the converted pretax amounts—including both contributions and earnings—but your Roth account investments will grow tax-free from that point, and your smaller Traditional IRA/401(k) balance will mean less taxable income from future RMDs. Market drawdowns are an opportunity to implement a Roth conversion at a lower cost, and the balance that you convert will enjoy tax-free growth as markets begin to recover.

Finally, EMBRACE FLEXIBILITY! If you can temporarily reduce or postpone some of your spending needs during a market drawdown—or tap into your borrowing capacity to avoid the need to sell assets (and realize capital gains taxes) to meet your spending needs—it will allow you to keep more of your portfolio invested and thus enhance your portfolio's ability to benefit from a market rebound. As we noted recently in The potential role of borrowing in a financial plan , balanced portfolios have historically outperformed borrowing costs on a fairly consistent basis.

So, there you have it! These are the steps you need to take to navigate the market while waiting for Trump to say "enough is enough." Stay proactive, stay strategic, and stay ready to pounce when the time is right. And remember, the market is a rollercoaster, but with the right strategy, you can come out on top!