Weathering the Storm: How Retirement Savers Can Thrive During Trade Policy Uncertainty

The financial markets have been on quite a ride lately. President Trump's wavering stance on tariffs has created unpredictability, leaving some retirement savers wondering how to respond. Let's unpack what's happening and how you can navigate these choppy waters. In this post we’ll put this month’s events in historical context, give specific strategies for protecting your savings during these times, and discuss how energy investments and US Treasuries are behaving during the current turmoil. It may turn out that protecting the planet this Earth Day can also help protect your retirement savings.

The Market's Rollercoaster Ride

As of April 17, 2025, the S&P 500 Index has taken a hit, dropping 6.9% so far this month. The decline is mainly because of trade tensions, particularly with China. China's announcement of retaliatory measures and the U.S. confirming an increase in import taxes on Chinese goods of up to 245% have sent shockwaves through the market. Despite the fact that the S&P 500 is down 10% year-to-date, it's worth noting it’s still up 5% compared to a year ago and 84% compared to five years ago.

Lessons from the Past

Let’s take a look at what we can learn from past times of market uncertainty. It can be tempting to make drastic changes to investment strategies during times like these. But history has shown that staying invested, especially during volatile periods, often pays off in the long run. Think back to the early 2000s and the 2008 financial crisis. Those who remained committed to their investment plans saw their portfolios recover and grow over time. For example, an investment of $10,000 in the S&P 500 at the start of 2001, despite the downturn, would have grown to approximately $25,000 by 2011. Similarly, $10,000 invested in 2008 could have grown to about $30,000 by 2018. These numbers demonstrate the power of staying put.

Seizing Opportunities During Market Dips

Volatile times like these can be the best times to invest in the stock market. They just don’t feel like it. Human nature is often to sell when stock markets crash, and then buy when it recovers. The result is to have sold low and bought high, losing out on the gains of the stock market. 

Reframing market crashes as opportunities to invest at a discount can help reverse the common equation, offering a chance to buy low and sell high once the market has recovered. Times of crisis can offer an opportunity to invest in companies across the economy that have solid fundamental value at a lower price than what is usually available.

It might sound counterintuitive, but market downturns can be golden opportunities. They allow investors to purchase quality stocks at discounted prices. The S&P 500's growth over the decades has been fueled by companies at the forefront of innovation, particularly in artificial intelligence. AI's integration across various industries suggests it's not just a passing trend but a cornerstone of future growth.

Tailoring Strategies to Your Retirement Timeline

Where you are in your retirement journey should influence your investment approach:

• 10+ Years Away from Retirement: If retirement is a decade or more down the road, maintaining a diversified portfolio with a healthy allocation to stocks can be beneficial. This strategy allows you to ride out market fluctuations and take advantage of compound growth over time.
  
  
• Approaching or in Retirement: For those nearing or in retirement, it's likely you have already diversified your portfolio toward a more balanced mix of stocks and bonds. This approach aims to safeguard your nest egg as you transition into retirement. Think of the bonds as your short-term savings to draw down over the immediate future while markets are in flux, and try to hold onto your stock investments until the markets have recovered.

How have oil & gas performed during this volatile time?

The fossil energy sector has been an interesting case study during this time of uncertainty on tariffs. Excluding fossil fuel companies from your portfolio has led to better returns over the past 10, 15, and 20 years, and that trend has not changed. This trend is because of the sector's volatility and the global shift towards renewable energy sources. The below charts show that underperformance and volatility. Fossil fuel data is from the S&P Energy Sector Index, which is made up entirely of fossil fuel companies. S&P Global classifies solar and wind companies as technology companies, rather than energy companies.

Fossil energy has been excluded from the Trump tariffs, but that has not kept the oil & gas industry exempt from market fluctuations. Oil prices have been on a downward slide recently, influenced by several factors. Concerns about an economic slowdown have dampened demand forecasts, leading to price drops. On top of that, the oil cartel OPEC+ has decided to proceed with a planned output increase of 138,000 barrels per day, the group's first since 2022. This move is counterintuitive during a time when one might expect OPEC+ to restrict demand in an effort to increase prices and revenue. Instead, OPEC+ aims to flood the market, exerting downward pressure on prices, and boxing out U.S. producers, who can’t compete under $60 per barrel.

These recent trends may be a desperate grab for revenue by an industry that is in decline. If you haven’t already gotten your money out of fossil fuel companies, now may be the time to do it. Once the oil and gas industry has faded away, you may regret not taking this action sooner. You don’t need to move all of your investments out, but you may be happy if you move some now, before it’s too late.

The Curious Case of U.S. Treasuries

U.S. Treasuries have behaved oddly lately. Traditionally seen as safe havens, their yields have fluctuated, puzzling many. This behavior is tied to investor reactions to trade tensions, especially with China, which has historically purchased a large portion of US Treasuries. An ongoing trade war may incentivize them to change that strategy, resulting in less demand for U.S. Treasuries. If you currently hold U.S. Treasuries, it may be time to consider diversifying those holdings.

Charting a Course Amidst Uncertainty

The current market can be unsettling. But there are simple steps you can take to navigate these waters. While you may not be able to control global policies, you can control your investment choices. Times of uncertainty can create some of the best investment opportunities. And if you take advantage of this moment to get out of the fossil fuel industry, you may protect yourself from further declines as solar, wind, and electric cars continue to claim more market share. All that while helping to protect the planet from more extreme weather, and set it up for a future worth retiring in. Because you don’t have to choose - you can have your 401(cake) and eat it too.

This article offers general information and should not be taken as financial advice.

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