A few readers / friends sent me this cheeky t-shirt image, celebrating the stock market’s quick bounce-back from the Trump tariffs. Folks thought I was too negative about Trump’s move to correct long-standing “trade imbalances” – even though my official investor position was to “stay the course”.
Related: Stay The Course
Still, I thought it was important to acknowledge that the S&P 500 has quickly gained back all of its YTD losses and inched into positive territory for 2025.
Perhaps my Investment Club prediction that the S&P 500 would end the year flat at 5,868 will come true!
Related: Investment Club Predictions 2025
Still, I’m cautious with respect to what comes next. While I can support many of Trump’s economic proposals, I’m still concerned that he and the GOP are going to blow their majority opportunity with sloppy planning and poor leadership. The initial structure of the House budget bill has income tax down, tariffs up, minuscule spending cuts, increased military spending, and loads more Federal debt. The initial details are woefully inconsistent with key Trump /GOP campaign promises to tame the Federal bureaucracy and “drain the swamp”.
Economist Milton Friedman wrote a book called Tyranny of the Status Quo about the “Iron Triangle” of government pushback that Reagan failed against 40 years ago: Politicians, Beneficiaries, and Bureaucrats. These three form a symbiotic relationship at the taxpayer’s expense. He suggested that Presidents only have about 6-12 months to drive major reforms. Trump is fighting the same forces (and often himself). Still, he’s created the most interest in paring back government since Clinton – I hope he can deliver.
As an investor, I’ll continue to stay the course, though. As I have said before, these actions have little negative bearing on our finances or lifestyle. Our FIRE plan is built with the financial resilience needed to weather political storms that spring up with each new Administration.
Still, I’d love them to unleash the economy from government in ways that will put our portfolio over the top. I often tell my son that with the right economic moves, we could be far ahead of where we are today (even though we are well ahead of much of Europe & Asia already).
What are your impressions of the quick market bounce-back and longer-term financial impact of the Trump / GOP plans?
Image: BuckTee.com
MrFireStation 
When listening to mainstream media doom and gloom crowd it is helpful to have perspective. The UK has issues, but things appeared to be fine last week in London. This week as the EU flag is pointed at, I can’t help but think how good the move was for the UK to remain independent.
We keep hearing about how low wages are in Portugal and how expensive everything is. We in the US are very fortunate and we have to fight the left who think Europe is utopia. It is, if you are part of the unproductive part of society.
I agree that the Republicans in the House will mess this up. Their majority is too slim and they want to get re-elected so they can’t appear to be cutting any free federal money
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I agree with your Europe assessment. Back in the late 80s, a neighbor from Denmark told me that you live a much bigger life in the USA than Europe. Really her way of knocking Socialism.
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So many have left Denmark that Danish politicians travel overseas to campaign with ex pats that still have a vote “back home”.
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I really hope the public is noticing the challenges Europe is now. Over a couple generations, the Left has sold the USA this vision of an empathetic, sophisticated, and successful Europe. Hopefully, people are opening their eyes and seeing what a mess it is. With respect to the EU & Brexit, when we were in Europe last week a British friend said: “EU … when you love government so much you want a government for your government!” 😉
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nice piece. The Triangle Block is often overlooked when folks vote for change. It took decades to get us into this mess, it will take decades to get us out.
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The bureaucracy is a stone fortress surrounded by barbed wire surrounded by walls surrounded by a swamp. Drain the swamp and you are still a long way from winning the battle.
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Tucker Carlson’ just sent an email’s morning email has an invitation to his Oren Cass interview that he calls “the destruction of The Blob”.
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At the end of Q1, the S&P 500 was already around 4% down from its high around the end of Q3 2024. The drawdown during the April reach near bear market at -19%. We are right back at about where we started on January 1st. This activity is what Warren Buffett refers to as “the manic depressive nature of Mr. Market.” A lot of price action without much happening.
Dr. Sen. Rand Paul had an interview yesterday and he was very upset about The Big Beautiful Bill’s plan to raise the debt limit by $5 Trillion, which would be the biggest jump ever.
On the dividend stock screening front, we are seeing stocks in the staffing, pharma and junk food industries show up as being undervalued. Mr. Market thinks MAGA and MAHA are going to have a big immediate impact. Pepsi is currently on sale with a higher dividend current yield and growth rate than the cigarette company Philip Morris International. Are people really going to stop eating junk food quickly?
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Having worked in “Big Food”, I can tell you that people like three things: fat, sugar & salt. That’s junk food. If you want healthy, portable, affordable, and colorful food, buy carrots. They are right in the front of the store and no one wants them. Restaurants will deliver pizza to your house. No one will deliver carrots. 🙂
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Actually, I just had a delivery from Ralph’s this morning and 5 pounds of carrots were a part of my delivery. We go through about one five pound bag every week. My dogs love crunching on them whole. We add shredded carrots to homemade coleslaw, slice and dice for stir frying and roast them as a part of a roasted root veggie trio of potatoes, beets and carrots.
How can Ralph’s afford to deliver to my home, out in the middle of no where for $70 per year? You would think the drivers would feel like they drew the short straw getting my delivery, but they seem to like the view, weather and solitude. I also shop Amazon, Home Depot, AutoZone and of course Amazon this way. Its a real time saver!
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