Is the sky falling? And, if so, what are we to do with our retirement accounts? The last few months have been full of whiplash related to tariff negotiations, discussions and assertions, as the Trump administration implemented a 10% tariff on all incoming goods and some substantially higher rates for specific countries. All the tariff talk has corporations concerned about their bottom lines—which we see reflected in the stock market’s unrest and, therefore, in investors’ retirement portfolios.
The Nasdaq and S&P 500 just completed their worst quarter since 2022. On Monday, Apr. 7, the Dow Jones Industrial Average had fallen for a third day in a row. But on Tuesday, Apr. 8, the market started to trend upward again, signaling a potential reprieve from the downward turn. All this has consumers, and specifically those with retirement accounts depending on stocks asking, what’s next?
Some are concerned that we are headed for another stock market crash, which analysts say can occur quickly and without much warning, but they also often happen after a long bull market run.
What’s going on with the stock market?
If you’ve been happy to hand over your investment management to the experts and haven’t looked at it since, here’s what’s happening with the stock market. “The market is reflecting a mix of uncertainty and adjustment. We’re seeing reactions to inflation, interest rates and global events that are causing some volatility. That’s normal,” says Paul Miller, managing partner and CPA at Miller & Company, LLP in New York. “The big picture? We’re in a transition period—shifting from a high-growth, low-interest-rate environment to something more balanced. It’s uncomfortable, but not unusual. Historically, the market has weathered much worse and come back stronger.”
“Markets react to uncertainty and the lack of clarity on the potential impact of certain events. Right now, the biggest unknown is the impact of tariffs on prices, consumer spending and economic growth,” says Saadia Ahmed, a certified financial planner (CFP) in California. “That uncertainty fueled the stock market decline last week as investors were pricing in the worst-case scenario and predicting a steep bear market and a deep recession.”
It was too good to be true
If the market for the past few years seemed too good to be true, that’s because it was. Russell Price, senior vice president of wealth management and financial adviser at MPI Wealth Management, UBS Financial Services, Inc., in Las Vegas, says those years involved “an alarming level of optimism that was simply unsustainable.”
“The ‘magnificent 7’ [top tech companies including Apple, Amazon, Alphabet (Google), Meta, Microsoft, Nvidia and Tesla] with their historically high price-to-earnings ratios, serve as a glaring testament to this overconfidence. Just two quarters ago, the market seemed invincible, with investors blissfully ignoring the looming threats of global events and potential shifts in policy,” he says. “However, we are now witnessing a significant shift in sentiment, as the market has turned on a dime, and risk factors, including recession speculations, are being factored into valuations.”
Stay calm and zoom out
If all of this is making you feel a bit panicky, take it from these investment professionals—that’s totally normal. Ahmed says, “It is really difficult to see that value of your hard-earned money drop so fast.”
She shares that not watching the news and your portfolio constantly is a great first step. “I have often wondered the value of watching Dow and S&P 500 returns continuously. For most people, it only induces fear and anxiety and a reflex to take some action.” Instead, she recommends zooming out to take a wider lens approach. “Look at your portfolios once the market recovers to see if this downturn affected you more than previously. If yes, then your portfolio allocation needs a tuning.”
Ahmed reminds investing clients that the stock market isn’t linear. “S&P 500 index has been negative in seven of the last 35 years. However, we remember the pain more than the gain,” she says. “The best days in the market follow the worst days, and if you miss those high days, it is difficult to catch up. The average stock investor’s return lagged the S&P 500 stock index by 5.5 percentage points in 2023. According to Dalbar, this is because people sell when there is panic and the market is down, then wait for things to improve and get back in when the market has recovered. However, investing should be like watching grass grow or paint dry.”
Ahmed shares that her clients are reacting with differing levels of concern, partially depending on where they are getting their information, their political affiliations and other factors. “I have encouraged clients to diversify their sources of information, as that can help them to get different perspectives and lower their level of anxiety.”
Assess your current asset location and level of risk
In times of distress, whether it’s the stock market or beyond, we can take a moment to look around and reorient ourselves. In the case of retirement investments, this means assessing current asset allocation, according to Price.
“Remember, 401(k)s are designed for the long haul, and this is an opportunity to leverage that longer investment horizon. Historical trends show that times like these present a unique opportunity to invest in broader markets, such as the S&P 500,” he says. “Now is the perfect moment for participants to seize the opportunity to put their cash to work. Consider moving up the risk scale: by strategically selling off less risky assets, you can redirect those funds into stocks that promise greater potential.”
One of the most tried and true strategies is called dollar-cost averaging, which Ahmed recommends in times like these because “it avoids trying to time the market.” This involves investing your money in equal portions regularly, according to the U.S. Securities and Exchange Commission.
Don’t give up on the stock market prematurely
You may have heard that challenges are simply opportunities disguised as problems. Miller says, “Times like these can actually be opportunities to invest at a discount.” If nothing else, he advises against making “knee-jerk decisions,” stating, “Don’t pull everything out of the market because you’re scared—it locks in losses and takes you out of the game. Instead, take this time to review your financial plan. Make sure your investments still match your goals. If you’re five years out from retirement, your strategy should look different than someone who’s 30,” he says.
Economics experts and historians look to history to understand market trends. Similarly, Price says we should look back just five years to what we’ve recently endured. “Just think back to 2020, when global markets and supply chains came to a standstill. In that unprecedented time, we were navigating uncharted waters without a historical playbook, leading to significant market sell-offs as fear gripped investors. However, as clarity gradually returned, so did confidence in the market.”
If the daily ups and downs of the stock market, even in the face of new tariffs, have you spooked, Miller redirects your attention to three aspects of investing that actually matter for long-term success: “Diversification, time in the market and regular contributions. [These] matter more than timing the market perfectly,” he says.
This isn’t to discount the unrest. “Shifting from a high-growth, low-interest-rate environment to something more balanced. It’s uncomfortable, but not unusual,” he says.
Price agrees with it being a great time to diversify. “By diversifying your investments through broader market portfolios, you can effectively manage company risk while still positioning yourself to benefit from market rebounds,” he says. “This method not only safeguards your investments against unforeseen fluctuations but also allows you to participate in the growth potential of the market.”
“Trump’s tariffs on imports have rattled markets, dragging down stocks and prompting a rethink for 401(k) holders. If retirement is still a ways off, keep investing—lower prices mean investments are on sale,” says Jessy Gilger, CFP, senior adviser at Sound Advisory, the financial planning and investment management arm of Unchained. “Treasury Secretary Scott Bessent has hinted that an economic shake-up might make nontraditional assets like bitcoin and gold a smart addition if they’re absent from your mix. If you’re nearing (or in) retirement, check your balance of stocks against safer options, including those like gold and bitcoin that are often overlooked. See if adjusting for stability makes sense, but don’t jump ship, as markets usually find their footing again.”
Photo by fizkes/Shutterstock
