This is not long after my last missive but clearly President Trump’s tariffs are creating temporary havoc. However, it is very disconcerting and especially when a whole year’s ‘normal’ returns for investors can be wiped out in just a day’s movement on a market. No-one alive has faced tariff announcements of this nature.
The last time protectionist policies ‘like this’ were used was during the Great Depression. Whatever one’s view, the implementation has been very clumsy, creating colossal uncertainty – a characteristic we humans hate the most, yet one of President Trump’s favourites to use. ‘Markets’ represent the collective human uncertainty in the short-term. It is no surprise the US has had its worst week since Covid first hit in 2020 and other markets won’t be far behind, if not emulating that. The UK and Europe may have surpassed the US markets since the autumn but investors aren’t impressed to see ‘less loss’, all the same.
I, nor you, cannot change what we don’t know. However, faced with times like this, we must concentrate upon what we do know and upon what we can trust and we must not panic, whatever that might suggest at the time. It might mean relying upon our trusted adviser to do their best in these very testing conditions – they should have experience and you should have a wide spread of different assets and asset classes to provide necessary protection to help you weather the storm till normality returns again, as I guarantee it will.
The falls are indeed concentrating upon the over-priced US stocks where the ‘Magnificent Seven’ have fallen 35% from their peak. However, other stocks and sectors are not immune, such as banks tumbling too, as well as multinationals considering how their supply chains will be impacted. The UK is not immune though its market is far cheaper in the first place, providing some greater protection – and the tariffs are less severe against us too.
The oil price has fallen savagely too, dragging energy companies down with it. Tariffs will apply to that and the US exports much oil. Sadly, it is likely to boost Russian oil supplies to nations oblivious to sanctions. Cheaper oil will help keep a cap on inflation but increasing costs of our imports will lead to higher inflation.
The UK economy is already shaky after a clumsy and poor budget last autumn and tariffs will impact confidence even more, short-term, especially as investors see losses on their savings and pensions. I should not be surprised to see the Net Zero target thrown on the ‘bonfire of sanity’ to help stimulate recovery and to cut everyone’s costs as we restart using our own fossil fuel resources again in this transitional period tackling Climate Change. I should not be surprised to see savage cuts in interest rates (like at Covid) if ‘this’ trauma continues too but that affects currency values too. At least government debt rises in value as it is seen as a safe haven and thus governments can borrow more cheaply again.
These declines may herald a winding-down of the cult of passive investing which has created a situation where colossal sums have chased all the same stocks, simply because ‘they are there’. The concentration risk in the US for investors (not our clients) could well come to haunt those sold these things on the basis of being ‘cheap and simple’ and well, ‘why do anything else’? Afterwards, regulators may need to create rules to avert repetition. For now, we have to be pragmatic and not lose our heads as others about us might.
For context, excluding income and costs, the FTSE100 was 8173 on 1 January and is 8,100 now. The Dow Jones was 42,544 and now 39,461.
Positives

Our investors will know – there remain some positives out there and one of those is the high flows of regular income from investments such as the strategies we have. The component investments don’t change what they do in the short-term, even if the prices at which people trade their ownership fall. This income is still there to help investors pay the bills and indeed, to reinvest in more cheap assets at times like these too.
The average income yield which our aggregated strategies is generating is over 5%pa and whilst yes, the tariffs and reactions will impact businesses, their profits and dividends, there will be winners as well which will do better. Indeed, if a stable company pays a dividend, then the cheaper its shares, the more income you buy for the same money. Many large companies and funds are also using significant excess cash to buy-in and cancel shares and this cash will now go even further, enhancing returns for remaining shareholders.
Not said naively but such erratic events can just as easily ‘go away’ too. Of course, they never create best conditions for selling investments either. Some assets will have risen in price too but acute pessimism also creates hesitancy of market makers to hold assets, so greater volatility increases spreads between buying and selling prices temporarily too. That means sellers receive poorer prices from others’ hesitancy. Traders also cut prices for smaller companies and certain other assets and Trusts especially.
We enjoyed an excellent recovery after the Pandemic. We have also had many ‘good news’ stories since autumn 2022, reflected in clients’ valuations and enhanced by many closed-ended funds ‘winding-up’, where we have received the real underlying value of assets held (often significantly over prices we paid originally). However, negative global reactions affect shares, bonds, commodities, currencies, property and even precious metals. However, remember the ‘uncertainty’ we face today is nothing like as bad as the Pandemic.
History tells us that investors always over-react in the face of acute uncertainty like this, despite the ‘best’ emotional stance being to stay calm and in due time, buying cheap holdings, not to sell them. We own many ‘special opportunities’ too and ones less-related to general conditions. Reasons for their ownership are unchanged. We also have a few assets which have risen, as they benefit from the trauma in myriad ways.
The next few weeks are crucial. Navigating them will be a challenge. I do understand the concerns and how they affect our clients. We are experienced and I have weathered too many storms in my 47 years in the financial world. That doesn’t make me perfect and whilst we have no crystal ball, things will settle and normalise again after the initial shocks. We shall do the best we can; you have our absolute, continued assurance on that.
Reality will prevail in the end. The Ukraine war and the Middle East situation will also settle, tariff angst will dissipate and economic growth return. The gains possible from now from even the slightest ‘good news’ could bring a significant benefit, like in late 2020. Remember that the good and growing income flows into investment accounts continue.
Remember, you still buy groceries, put fuel in your car and home, use electric, water, telephones and mobiles, use pills, maintain properties, engage accountants, pay your insurance premia and all the other bills and yes, you continue to ‘enjoy’ yourself. You’ll still buy technology and cars and things for your home and business. Business will survive, make profits from us and pay us dividends, rents and their loan interest.
Of course we cannot guarantee the near-term future and nor say how long you may need to wait for stability. However, a bounce can be big – a 25% gain on good news from the Ukraine war, global economics, tariff dissipation or interest rates would not be unsurprising even if not a prediction but mathematical analysis based on simple ‘probability’ and very depressed values. Risk: reward balances are favourable for those with value-based assets across wise, diversified strategies. Volatility is two-sided and it can flip to positivity easily.
Are there things you can do? Yes, there will be cheap investments to buy out there but it is too early to know where the movement is heading in the immediate term but taking advantage of others’ panic is a good opportunity. However, you may need to remind yourself of the sensible-term nature of such investment, as well. If you are taking a regular income from your investments – can you postpone that for a while or reduce it, so that it can be used to buy cheap assets from distressed sellers? If you might need a withdrawal, can you defer that till better times? These are all practical ideas you can consider, practical decisions you can own in the face of these tumultuous conditions.
Certainly, it is not the time to do the wrong thing. We have been there before, many times, even if the colour of this crisis is very different to previous ones. Remember too, we invest in tangible things at the end of the day, real businesses, real funds and commodities.
My best wishes
Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers