MW 'I cannot afford to lose more': What will happen to the market in April? I plan to retire in 3 years. Should I sell now?

By Quentin Fottrell

'It may take longer to recover my losses. I cannot afford to lose more'

April is National Financial Literacy Month. To mark the occasion, MarketWatch will publish a series of "Financial Fitness" articles to help readers improve their fiscal health, and offer advice on how to save, invest and spend their money wisely. Read more here.

Dear Quentin,

With all that's happening in the world - including the U.S. trade war - what will or could happen in April with the U.S. markets? Should I sell some of my stocks to slow the losses recently taken? I plan to retire in 3 years. It may take longer to recover my losses. I cannot afford to lose more.

Soon-to-be Retiree

Related: I invested $100,000 in the S&P 500 in February and lost $10,000. How long will it take to recover?

Dear Soon-to-be,

If I told you to sell, and we entered a prolonged recession, you'd thank me. If I told you to sell, and world leaders figure out a path ahead on tariffs and trade, leading to the market bouncing back, you'd curse from here to kingdom come. I'm not going to tell you to sell. Nor am I going to tell you not to sell. I do believe it would be a mistake to take your money off the table at the latest movement in U.S. stocks. You have 3 years or more before retirement and should be earning returns on your investments during your retirement, too.

It's important to be as sanguine about the dips in the Dow Jones Industrial Average DJIA, S&P 500 and Nasdaq COMP, as you perhaps have been about the bull market over the last 10 years. Remember, the pullback in company investment - production, hiring etc. - has led to the recent selling on Wall Street. But remember too that this comes after a decade of healthy growth in U.S. stocks, with the exception of 2015, 2018 and 2022.

To answer your question, I would need a crystal ball - and even then, I'm not sure the dark arts would produce an accurate answer. But the turmoil in the market is also what will help you. The U.S. stock market does not go in just one direction. It goes up and it goes down; and, if you give politicians, business leaders, investors and economists the time they need to process recent events, you will rest easier.

Instead, we have to rely on economists' art of predictions for April and 2025. Three years is a long time in politics and finance, and equally difficult to predict. Thus far, we have a cacophony of fear, noise, political machination and wildly fluctuating estimates. We have been here before over the last 10 years, with market corrections, changes of administrations, threats of trade wars and even a global pandemic. Throughout all of that, the market has abided.

In your 60s, you should have between 30% to 50% in equities, with the rest held in bonds and, say, 10% in cash.

I'm loath to predict what will happen in the next month or three years, but Goldman Sachs has given it a shot (sort of). It predicts that the S&P 500, which has already entered correction territory (a 10% drop from a recent peak), will fall 5% over the next three months. It does not expect the S&P 500 to trade as high as its recent record level of 6,000 for the rest of this year. Instead, it sees the index trading at between 5,300 and 5,900.

And now, a warning, especially for you. "We continue to recommend investors watch for an improvement in the growth outlook, more asymmetry in market pricing, or depressed positioning before trying to trade a bottom," the bank's analysts wrote in a note released Monday. It cites higher tariffs, weaker economic growth, and greater inflation than previously assumed, leading to the bank to cut its S&P 500 EPS growth forecasts to 3% in 2025 from 7%.

Citing Trump's tariffs, including a 25% on imported automobiles and auto parts, Yardeni Research is toning down its "roaring 2020s" estimates, raising the chances of a stagflation - persistently high inflation coupled with slower economic growth and higher unemployment - to 45% from 35%. That includes the possibility of a "shallow recession" later this year, following a buy-in-advance shopping spree during April and May."

A sliver of a silver lining: "We still expect that the roaring 2020s scenario will prevail over the remainder of the decade, as it has so far, but after 6 to 12 months of heightened stagflationary risks for now," Ed Yardeni, president of Yardeni Research, says. "So we are lowering our outlook for S&P 500 earnings per share and our S&P 500 SPX stock-price targets for 2025 and 2026. We are still targeting 10,000 for the S&P 500 by the end of the decade."

Economists, for the most part, don't like tariffs, mainly because they push up the cost of goods, and encourage corporate leaders to pull back their outlooks. "A happy outcome would be that the U.S. would negotiate tariff reductions, but that won't happen if the U.S. slaps a 20% tariff on all imports across-the-board," Yardeni says, "just because Peter Navarro has convinced the president that tariffs will bring $6 trillion in revenue over the next 10 years."

Try to be as sanguine about the dips in the U.S. stock market as you perhaps have been about the bull market.

That said, I hope you have a balanced and diverse portfolio. In your 60s, you should have between 30% to 50% in equities, with the rest held in bonds and, perhaps, 10% or so in cash for emergencies. The closer you get to retirement, the more you should hedge your exposure to equity markets. Of those stocks, T. Rowe Price suggests 60% in U.S. large caps, 10% U.S. small caps, 25% in developed non-U.S. stocks, and 5% in emerging markets.

"Retirement can last up to three decades or more, meaning your portfolio will still need to grow in order to support you," T. Rowe Price says. "Exposure to stocks should remain an important part of your allocation target, even in retirement. However, a possible need to access these assets for income in the near term means you are more susceptible to short-term risks. That's why it's important to position your portfolio to add more exposure to bonds and cash."

That doesn't help assuage your immediate concerns. You, like millions of baby boomers, are planning to retire soon. My golden rule for retirement and life: Don't put yourself under unnecessary pressure to get to the bank by 3 p.m., if you can attend to your business tomorrow, and don't put stress on your shoulders by viewing your life as a countdown over the next three years to retirement. Life will throw us tariff wars or property crashes, so it helps to be flexible.

Few retirees, I imagine, can afford to lose money, but you can't go against the laws of physics. The world will continue to rotate on its axis and, in addition to introducing more flexibility to your retirement plans, you would benefit from maintaining some mental and emotional tractability. The more flexible you are in your mind and in your plans, the more resilient you will be in your approach to swings and roundabouts in the markets.

Economic calendar: Watch this week for manufacturing, construction and jobs data

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.

The Moneyist regrets he cannot reply to questions individually.

More columns from Quentin Fottrell:

Will Trump's policies lead to a recession? I'm 62 and earn $50,000 a year. How should I invest $100,000?

'She has been telling him lies': My sister convinced my father to sign everything over to her. What can I do?

My father died, leaving everything to my 90-year-old stepmother. Do I have a right to ask her if I'm in her will?

Check out The Moneyist's private Facebook group, where members help answer life's thorniest money issues. Post your questions, or weigh in on the latest Moneyist columns.

By emailing your questions to The Moneyist or posting your dilemmas on The Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.

By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

-Quentin Fottrell

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 01, 2025 10:22 ET (14:22 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.