Is It Different This Time?
Trump and Your Investment Portfolio
All of my training and experience as an investment advisor leads me to believe that it is not different this time. That despite the noise—loud, chaotic, and at times outright bizarre—coming from Trump and his administration, the stock market will continue to do what it has always done:
Mostly go up, with occasional drops along the way.
Historically, those drops are far less frequent than the uptrends. After all, the average annual compounded return of the S&P 500 over the past 30 years (1995-2024) is 10%. That kind of return would not be possible if the market declined more often than it rose.
To put this into perspective:
If you had invested $50,000 in the S&P 500 in 1995, your investment would be worth approximately $793,155 today—even though along the way, the market dropped by as much as 38.49% in a single year (2008) and rose by as much as 34.11% in a single year (1995).
Yet, I get it. The headlines are discouraging.
Every day, Trump says or does something that seems determined to throw the economy into chaos. Tariffs on Mexico, Canada, and China. Tariffs on all steel imports. Disbanding entire federal agencies. Appointing people to powerful positions who have zero experience. It can feel like we’re watching a slow-motion train wreck.
But here’s the thing: We’ve been here before.
There have been many moments in recent history when it felt like the world was ending, when investors panicked, and when people swore, “This time, it’s different.”
Yet, time and time again, the market recovered.
So let’s take a walk down memory lane and revisit some of these moments of financial doom and gloom.
1. The COVID Crash (March 2020)
"This is the end of the world as we know it."
No event in modern history disrupted businesses and individuals’ lives quite like COVID-19. Entire economies shut down. Travel halted. The global supply chain crumbled. The stock market plunged 34% in just one month, one of the fastest and deepest bear markets ever.
Yet, despite the chaos, the S&P 500 rebounded within months and went on to hit new highs. If you had stayed invested, you would have been handsomely rewarded.
2. The December 2018 Market Rout
"The Fed is going to crash the economy!"
In late 2018, the market had a near-bear market drop of 20%, triggered by the Federal Reserve raising interest rates and fears of an economic slowdown.
By early 2019, the Fed softened its stance, and markets roared back to life—fully recovering in just a few months.
3. The U.S.-China Trade War (2018-2019)
"This trade war will sink global markets!"
Trump imposed harsh tariffs on China, and in response, China retaliated. Investors feared a prolonged economic cold war. At multiple points in 2019, markets tumbled as headlines screamed about impending disaster.
Yet, despite the tension, markets ended 2019 at record highs.
4. The 2008 Financial Crisis
"The economy is collapsing!"
The housing market imploded. Lehman Brothers collapsed. The S&P 500 crashed nearly 40% in 2008. People truly believed we were heading into another Great Depression.
Yet, those who stayed invested saw their portfolios fully recover within a few years as the longest bull market in history took off.
5. The Inflation and Interest Rate Panic (2022)
"The Fed is killing the stock market!"
After the COVID stimulus, inflation soared to a 40-year high, leading the Federal Reserve to hike interest rates aggressively. Stocks took a beating—the S&P 500 fell 19.4% in 2022.
But what made 2022 even worse? Bonds, which are usually a safe haven during stock downturns, also had their worst year in decades. The Bloomberg U.S. Aggregate Bond Index dropped 13%, an almost unheard-of decline for an asset class meant to provide stability.
For many investors, there was nowhere to hide.
But as inflation cooled and the Fed slowed its hikes, markets rebounded strongly in 2023 and 2024. Those who stayed invested were rewarded once again.
Volatility: Expect It, but Don’t Fear It
With so much uncertainty around Trump’s policies, it’s almost guaranteed that volatility will spike. Markets hate uncertainty, and drastic policy changes—whether it’s tariffs, tax cuts, or regulations—cause investors to react, often emotionally.
But here’s the thing: volatility is normal.
The S&P 500 experiences, on average, a 14% decline every single year, even in years when the market ultimately finishes positive. Spikes in volatility don’t mean doom—they’re just a feature of the market.
What matters is staying invested despite the noise.
What About a Recession?
Recessions do impact stock market returns. And while most economists don’t see a recession in the next couple of years, it’s worth considering whether Trump’s policies could trigger one.
Some factors that could increase recession risk under Trump:
Trade wars and tariffs could disrupt supply chains and increase costs for businesses.
Aggressive tax cuts without spending cuts could drive up the deficit and lead to financial instability.
Deregulation in key industries could create bubbles (think: the 2008 mortgage crisis).
That said, recessions are normal. Since 1995, we’ve had three recessions—each one felt painful, but the market recovered and reached new highs. Timing recessions is nearly impossible, and trying to jump in and out of the market based on recession fears often does more harm than good.
So, Is It Different This Time?
In the moment, every crisis feels like the worst one yet.
In 2020, we thought the world was ending.
In 2018, we feared the Fed was crashing the market.
In 2019, we panicked over tariffs and trade wars.
In 2008, we saw the worst financial collapse in decades.
In 2022, we thought inflation and rate hikes would wreck everything.
Yet, the market kept going.
That’s why I’m not losing sleep over Trump’s policies—not because they aren’t disruptive or reckless, but because markets don’t hinge on one person or administration.
The market is bigger than politics. Bigger than any one president. Bigger than fear.
So, the next time you hear someone say, "It’s different this time,"—
Just smile and remember:
It never is.
Disclaimer
The information provided in this article is for educational and informational purposes only and should not be considered investment, tax, or legal advice. Past performance is not a guarantee of future results, and all investments carry risk, including the potential loss of principal.
The views expressed are my own and do not necessarily reflect the opinions of any firm or organization with which I am affiliated. While efforts have been made to ensure accuracy, I do not guarantee the completeness or reliability of the information presented.
Before making any financial decisions, consult with a qualified financial advisor, tax professional, or legal expert to assess your specific situation