MW How to protect your money during a period of economic turmoil

By Philip van Doorn

This week, the MarketWatch team tackled risks to investors, consumers, home buyers and retirees

President Trump waited until after the market close on Wednesday to announce a slew of tariffs on goods imported to the U.S. from countries all over the world. On Thursday, the S&P 500 SPX dropped 4.8%, and in afternoon trading on Friday the large-cap U.S. benchmark was down nearly another 6%.

Long-term investors have to expect that stocks broadly will experience corrections (10% declines for indexes from recent highs) and bear markets (20% declines). The S&P 500 has recovered from many such declines on its way to a 10.4% average annual return over the past 35 years with dividends reinvested, according to FactSet. The reasons for the declines - such as the dot-com bubble of the early 2000s, the financial crisis of 2008, the COVID-19 outbreak in 2020, and now Trump's tariffs - will vary, but the recovery pattern has kept repeating.

Then again, it is no fun to wait, and recoveries can take years. Depending on your risk tolerance and needs as an investor, you can take steps to reduce your investment risk for the long haul.

One fear springing from Trump's decision to direct tariffs on dozens of countries - including Mexico and Canada, with which he negotiated trade agreements during his first term - is stagflation, known as a combination of slowing economic growth and price inflation.

This week, MarketWatch's Christine Idzelis outlined three ways you can diversify your investment portfolio to protect against stagflation.

And columnist Brett Arends reminded readers of what Trump was trying to accomplish on "liberation day" and how stability in the markets might be restored.

Here is more coverage of market movements and ways to cut investment risk - or even take advantage of it - during the trade turmoil:

-- These ETF strategies can help lower your investment risk as tariffs ramp up stock-market uncertainty

-- Trump's tariffs are having a surprising impact on the U.S. dollar. Here's how investors can benefit.

-- If the market doomsayers are right, stocks will be higher in the next few weeks

Helping investors when emotions kick in

If you have been making regular contributions into a low-cost stock index fund within a tax-deferred retirement account, and have decades to go until you plan to begin making withdrawals, the periodic down periods for the market can work in your favor. You pay lower prices during periods of stock-market weakness, which improves your long-term returns.

But if you have made a large investment right before a broad decline, it can be very difficult to ride through the turmoil. You might be tempted to move your money to the sidelines. But then you might return after a market recovery has started, and that will lower your long-term returns.

Our Quentin Fottrell, also known as the Moneyist, answered a question from a novice investor who was the victim of bad luck, immediately seeing a large investment decline by 10%. Here is his advice for any new investor about how to live though down markets on a long-term journey toward building up a nest egg.

Fottrell also helped an investor who wishes to retire in three years and has been worried about the stock market. Here are actions they can take and different ways of thinking that might help them to prevent mistakes while managing risks.

And markets reporter Gordon Gottsegen looked into how emotions and experience help turn people into better investors.

More on the emotions of the market from Charles Passy: Who's freaking out the most over the stock-market dive? It depends on who they voted for.

Should you sell your Big Tech stocks?

Through Friday afternoon, the S&P 500 was down 13% for 2025, following gains of 23.3% in 2024 and 24.2% in 2023, excluding dividends. The stellar performance in 2023 and 2024 was driven in great part by the largest U.S. technology companies, because the S&P 500 is weighted by market capitalization.

Some of the biggest technology players have been hit hard this year, but some perspective can be added by looking at how their prices have moved (this time excluding dividends) since the S&P 500 took an 18% dive in 2022. Here is how share prices have moved for the largest five holdings of the SPDR S&P 500 ETF Trust SPY, which is designed to track the S&P 500 by holding all of its stocks. Together, these five make up 24.4% of the SPY portfolio:

   Company              Ticker    April 4 price change as of 1 p.m. ET  2025 price change  Price change since end of 2022 
   Apple Inc.           AAPL                                     -5.0%             -22.9%                           48.6% 
   Microsoft Corp.      MSFT                                     -2.3%             -13.5%                           52.0% 
   Nvidia Corp.         NVDA                                     -7.4%             -29.8%                          545.3% 
   Amazon.com Inc.      AMZN                                     -2.0%             -20.3%                          108.2% 
   Meta Platforms Inc.  META                                     -3.9%             -12.8%                          324.3% 
                                                                                                          Source: FactSet 

The table only shows price changes, but these have been supported by vast increases to revenue and profit (especially for Nvidia $(NVDA)$) since 2002.

Tech reporters Emily Bary and Laila Maidan looked into whether or not investors should consider parting with their favorite technology stocks:

-- Apple's stock is getting pounded on tariff news. Don't freak out just yet.

-- Should you sell these 5 tech stocks heavily exposed to tariffs? How to crunch the numbers.

-- Is Nvidia's bubble bursting? The stock is cheap - if you can stomach this one risk.

A possible 'silver lining' for the housing market

The prospect of higher prices for all sorts of housing-related items in the wake of Trump's new tariffs would seem to bode ill for anyone looking to buy or renovate a home. But real-estate reporter Aarthi Swaminathan reported on a possible silver lining for home buyers.

More: I'm a nervous home buyer. Will Trump's trade war lead to a recession and, finally, a reduction in house prices?

Trend: 10 housing markets where prices are falling fast this spring home-buying season

Digging into the Trump tariffs

When Trump discussed his plans for new tariffs on Wednesday, you might have been surprised at how round the presented numbers for other countries' tariffs were. Economy and politics reporter Victor Reklaitis took a deeper look at how the Trump administration did its tariff calculations.

Companies reporter James Rogers explained how the application of very high tariffs on imports from one particular country might affect several U.S. companies.

And personal-finance reporter Andrew Keshner reported on how much more U.S. shoppers should expect to pay for various items once the new tariffs are applied.

Woe is Tesla

Shares of Tesla Inc. $(TSLA)$ were down 10% Friday afternoon, for a year-to-date decline of 40%. Tomi Kilgore looked into the threat to Tesla from Trump's trade war with China.

Brett Arends: Elon Musk is rumored to be eyeing the White House exits, but can he save Tesla?

Related: These U.S. companies might have the most at stake as other countries counter Trump's tariffs

Should you sell your reliable old car? Should you hurry to buy a new car before the tariffs hit home?

The answer is no, as retirement columnist Beth Pinsker explained from her own experience.

More from Beth Pinsker: Inside one overwhelmed Social Security office: 'It feels like we're being set up to fail,' says a veteran staffer

For AI investors

For years, investors have heard about ways artificial intelligence can lead to greater efficiency in various industries and to innovative products and services. Another investment theme has been the need for various governments to replenish military supplies or augment their conventional forces in light of Russia's ongoing war against Ukraine.

But Brian Adams, the founder and managing partner at B Ventures Group, pointed to another long-term AI-related investment idea - which is to invest in companies making use of new technology to help prevent conflict and rebuild after wars end.

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-Philip van Doorn

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April 04, 2025 14:57 ET (18:57 GMT)

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