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Yesterday’s news about new worldwide tariffs and the resulting impact on financial markets is going to scare a lot of people. Whether you are someone who looks at your portfolio every day, checks periodically, or hardly ever looks at all, it would not be unusual to have some sort of impulse to take action with your portfolio. The most drastic would be to “go to cash,” presumably re-entering the market “when things get better.”
The issue is always that it will never feel like a good time to get back in. Think back to March 23, 2020…everyone was locked down in their homes, and the impact of COVID had only just begun. Yet despite the fact that people were still wearing masks and maintaining other COVID-related precautions a year + later, that day in March 2020 turned out to be a generational buying opportunity for stocks.

On the surface, it’s logical that owning a diversified basket of public stocks (individual companies and/or indexes) is reflective of the broader economy, but the data doesn’t support it. In 1996, roughly 8,000 companies were listed in the U.S. stock market. Today, that number is fewer than 4,000.

It happened pretty quickly. Everything seemed to be humming along nicely, with the S&P 500 reaching an all-time high in mid-February, and now we’ve suddenly found ourselves in a new...