EXPLAINER: Is It Time to Buy Stocks or Hide Under Your Bed?
Recession rumors, market whiplash and what Congress could do
Announcements:
I’m running a THERE BETTER NOT BE ANOTHER RECESSION sale on the Stack. For the next week you can subscribe for only $2.50 a month with a $30 annual subscription. Because community > chaos and I’m not doing this next era of late-stage capitalism alone.
A lot of you asked BUT WHAT DO I DO?! This stack features an interview with personal finance expert Farnoosh Torabi with her recommendations for how to try to keep your sanity while the stock market responds to this administration.
At the end I give up an update on what power Congress has in this and how you can call your reps.
Over the past week Trump’s tariffs have sent US markets and the global economy into a tailspin. And in classic Trump fashion, it is chaos seemingly without plan or purpose. Yesterday, just hours after the extraordinary tariffs were put into place on 60 countries, he said he would pause most of them and leave the 10% blanket tariff in place in addition to the 25% tariff on cars, steel and aluminum.
He also raised tariffs on China up to 125% in response to Beijing increasing its tariffs to 84% - a playground spat (or maybe a dick measuring contest) that could derail the global economy.
After the Stock market lost trillions of dollars because of the impending crisis, nearly every stock rose in response to his announcement of the pause. While Trump had spent days insisting that he was not concerned about the market downturn, he extracted nothing tangible from any negotiating partner and yipped.
Jamieson Greer, the U.S. trade representative, touted “the Trump way” on Capitol hill as an effective tool to bully other countries into giving you market access. One thing we seem to know conclusively is that this was not actually about re-invigorating American manufacturing.
Trump says many countries came to beg at his door. Now US companies will be begging for exceptions if there is implementation. Trump has created his favorite environment, where he feels everyone is treating him like the god he thinks himself to be.
Some Democrats (in Congress and on my feed) are questioning if this is market manipulation because Trump posted earlier in the day that it was a great time to buy stocks (when they were low).
For millennials it feels like we are the precipice of yet another “once in a lifetime” event. As our parents' retirement accounts were getting decimated so many of my friends were already thinking about how they would change their lives to care for them. Friends who work for manufacturers have told me they spent the week trying to prepare for an impossible situation - prices so high that they wouldn’t be able to sell their products. Now, they don’t know what to do, Trump’s erratic leadership has created such a level of uncertainty that it’s impossible to plan.
Financial experts are not advising people to breathe easy, Michael Arone, a chief investment strategist at State Street Global Advisors, told the New York Times, “Investors should brace for more market volatility in the coming weeks and months as Trump’s trade policy becomes more coherent.”
What Can You Do?
What I’ve heard from lots of you is that you are scared, so I reached out to someone who understands that personal finance isn’t just about money, but also about our own personal traumas and past histories, our hopes and fears for the future and our shared concern for our communities. Farnoosh Torabi has been a financial journalist for more than twenty years, focusing mainly on personal finance. Her latest book A Healthy State of Panic digs deep into our financial fears, what they say about us and how we can use that fear to move forward.
I know traditional wisdom is not to pull money out of the stock market during a downturn but with Trump what does normal even mean? Should we still be sitting tight?
We need to accept that the stock market is unpredictable and this isn’t a forever thing and as long as we don’t need to tap our investments this year (or in the next few years) we don’t need to panic. Historically, markets recover. Every. Single. Time. But those who bailed out during tough times? They often missed the comeback — and that’s when the real wealth-building happens.
And if you’re scared, that’s normal. Fear of losing money is valid. It’s trying to tell you something. Don’t ignore it, and don’t let it drive the car either.
Your fear might be saying: “Am I overexposed to risk? Am I too reliant on this money in the short term?” That’s useful intel. But don’t translate that into “sell everything.” That’s panic, not strategy.
Is it a good idea to buy stocks when the market dips? To buy bonds? To hide money under a mattress and pray? Let’s not go full mattress. If you’ve got a long time horizon and some cash to invest, a dip can be a smart time to buy — stocks are essentially on sale. Bonds are also back in style, offering stability and solid yields. A quick guide: subtract your age from 110 — that’s the percent you might keep in stocks. The rest? Bonds. Balance is the real safe haven.
What mistakes do people usually make in situations like this? The three big ones are panic selling (locking in losses that could have been temporary), trying to time the market (spoiler: even the pros don’t get it right) and freezing completely (doing nothing out of fear, including not continuing to invest.)
What adjustments should I make to my savings or spending habits to weather this period? Some smart moves right now, especially with escalating threats of a recession.
Map out your worst-case scenarios
Ask yourself: What if I lost my job this month? What if my basic expenses rose 15%? What if my credit card APR spiked? Write down what you’d do in each case. This isn’t being negative—it’s being prepared. Fear hates a plan.Prioritize cash
If you can, stockpile cash now. Delay non-essential big purchases, pad your emergency fund, and stay liquid. Aim for access to at least one month of expenses, more if you’re self-employed.Pay off high-interest debt
Credit card interest rates are still sky-high—and they could go higher if the Fed is forced to raise rates due to inflation. Focus on knocking down variable-rate debt before it gets more expensive.Reevaluate your investments
If you’re decades away from retirement, stay the course. If you’re nearing retirement—or just entered it—this may be the time to rebalance your portfolio and reduce your stock exposure. Protecting your gains is key when your investments are becoming your income.Protect your income
This is more important than inflation. If you're self-employed, start exploring backup income streams and new clients. If you're employed, ask your HR or manager what a layoff would look like (severance, unemployment, COBRA). Update your résumé, your network, and your side hustle plan. Getting laid off is hard. Getting caught off guard is harder. Information equals power.
Why is it important to maintain a long-term perspective despite short-term losses? Because obsessing over every market dip is a fool’s errand — and it’s exhausting. This isn’t day trading. This is investing, and the biggest predictor of success isn’t timing the market — it’s time in the market. History shows that even the ugliest bear markets eventually recover, but only if you give them space to do so.
Pulling your money at the first sign of trouble might feel like taking control, but it often does more harm than good. You’re interrupting the very growth cycle you signed up for. Long-term thinking isn’t just a strategy — it’s a shield. It protects you from making emotional decisions in moments of uncertainty and keeps your focus on the real goal: building lasting wealth.
What are the warning signs of an impending stock market crash? And is that something to actually be concerned about right now? There’s no flashing red light that says “Crash incoming!” But there are signals that stir up concern like runaway corporate debt, spiking interest rates, geopolitical turmoil, and yes, surprise tariffs.
Still, trying to predict a crash is like trying to catch a falling knife — dramatic, risky, and usually a bad idea.
A better use of your energy? Look inward. Is your portfolio diversified? Are you mostly in low-cost index funds that perform well over the long run? Do you have cash reserves? Are your investments aligned with your goals, not your gut.
