Dave P.: “I have a friend who manages a small portfolio of stocks for me. A recently sent me a market commentary, understandably focused on the tariff issue. My response:

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My own thinking is that the tariffs, though significant per se, are just a sliver of the angst the market is now processing. They are just one weapon of potential self-harm for America, its people, and its corporations, and the valuation of those corporations. If Trump tomorrow declares victory, says every country in the world has kowtowed, they all have offered “great deals” which he graciously has accepted, so consider Liberation Day as being on rollback, the market will celebrate temporarily.* But it soon will reprocess the bigger message, that the Administration’s malevolence, mendacity, fecklessness, recklessness in matters of security as well as finance, incompetence, blindness, distrust of science, cruelty, pathological absence of empathy, disloyalty to friends, cozying up to tyrants, etc., etc. etc., are a recipe for catastrophes that to most remain unimaginable.

*Someday, likely in the near future, the stock market will have a very large gain. Surely we don’t want to miss that!  And that gain should signal “all clear,” right? Well, not exactly. If we look at the 20 best one-day gains in the DJIA, fully 40% of them, 8 separate days, occurred after the October 28, 1929 crash, and before the ultimate bear market low, 89% lower than pre-crash, in July, 1932. Had you bought following any of those big up days, you would have lost at least 16% to the bottom (from whence it would take another 22 years to recoup the pre-crash level). Excluding that (16)% day, buying at the close of any of those other 7 big up days would have led to losses of (29)-(84)%. Lest you think these archaic examples are long-bygone, two of the market’s 7 best single days occurred in October, 2008, following the commencement of the bear market foreshadowed by the September Lehman Brothers bankruptcy. The ultimate declines from each of those closing levels was (29)-(31)% to the March 6, 2009 closing low.

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“I sent that Monday.”

→ Two days later — yesterday — we got that “very large gain.”

Far from breathing a sigh of relief, I’d take yesterday’s market leap as an opportunity to sell some of your holdings . . . or, if they’d be subject to large capital gains taxes, buy some long-term puts like the ones I suggested last month.

That’s what I’d do now.  (Late yesterday, I bought more puts.)

Of course, I’d love Dave’s caution — and my own — to prove unwarranted.  Yet it‘s very hard to see how this ends well

In the best-case scenario, where Trump gets countries to lower their tariffs, that will be nice and allow him to declare victory.  (Europe can “slash” its from 1.7% tariff to zero, but can he get them to lower it below zero?)

But even then, so much damage has been done.

In a few short weeks, he has transformed America from a rock of stability into an unpredictable, unreliable, flailing bully, whose leader says — in public! on camera! — that countries are “coming to kiss [his] ass.”

Publicly humiliating people — or nations — has a strange way of making them hate you.  (Obama’s mocking Trump at the 2011 Correspondents’ dinner may have persuaded him to run; Hillary’s “basket of deplorables” remark five years later may have cost her the election.)

Having most of the world hate you — and distrust you — is probably not a great long-term strategy for success.

Putin and Xi are thrilled. 

The stock market — and bond market — not so much.

And of course the idea that we have 50 or 100 million Americans available to replace the labor of the 50 or 100 million foreign workers who sew our clothes and assemble our iPhones, make our umbrellas, toys, and Christmas tree ornaments — and make the merchandise Trump sells his followers — is just ridiculous.  Our work force is only 170 million, of whom 8 million are unemployed.  And Trump plans to deport millions of workers who pick our fruit, trim our hedges, build our homes, and care for our elderly, which will further shrink the pool available to do the work the Chinese and Vietnamese (and the penguins he is tariffing) currently do for us.

How we even get through the next 19 months to the mid-terms is not clear . . . let alone to 2028.

And does anyone doubt that he aspires to the models of strong men like Putin and Xi who rule for life?

Which brings me to what one guy thinks will happen April 20.

I doubt it will come that fast if it comes at all.  Maybe in May or June or July?)

But:

a) It’s an interesting read.

b) The more people aware of this fantastical scenario, the less likely it is to happen.

c) It’s happened lots of other places.  (Have I ever mentioned the book that Trump, famously a non-reader, long kept by his bedside?)

So please read this:

On April 20th, 2025, the United States may Cross the Point of No Return