Trump's announcement of a tariff policy has caused market turbulence, but individual investors are still holding firm in the market.

On April 2, President Trump of the United States announced the imposition of "reciprocal tariffs" on multiple countries worldwide, which caused turmoil in the financial markets, leading to the S&P 500 index dropping by more than 12%. Despite this, many wealth management firms noted that most individual investors stayed in the market, and no large-scale sell-off was observed, particularly noting that young investors seized the opportunity to increase their investments. Advisors suggest increasing cash allocations to manage uncertainty and to avoid emotional trading.

Investors' Anxiety Rises, Advisors Swamped with Calls

"Our phones have hardly stopped ringing," admits Rafia Hasan, Chief Investment Officer at Perigon Wealth Management in Chicago. Since President Trump announced the new tariff policy, the volume of client calls has surged, especially among investors nearing retirement age who are most anxious. She noted, "Even clients who are usually calm are asking if they should switch to all cash."

Nevertheless, Hasan emphasized that no client has fully liquidated their portfolio yet. She stated, "Our job is to keep clients steady and prevent them from making emotional decisions."

Horizon Investments strategist Austin Fitch also observed that call volume has increased by about 50%, but only 10% to 15% of clients have made extreme moves. He said, "The easiest decision is to sell everything and leave; the hardest is knowing when to get back in."

Young Investors Increase Investments, Respond Rationally to Volatility

In contrast to the anxiety of retirees, young investors are demonstrating more rationality and initiative. According to Vanda Research, retail investors purchased a net total of $5.1 billion in stocks on April 3 and 4. Online financial platform Wealthfront noted that the inflow on April 4 alone was 300% higher than usual.

Anne Marie Stonich, Chief Wealth Strategist at Coldstream Wealth, stated, "Young investors are not in a hurry to exit the market; instead, they are using the downturn to ask us how to adjust asset allocation, save on taxes, or rebalance."

Fidelity's data also shows that on April 7, Nvidia's stock price surged nearly 11%, with as many as 72% of active users choosing to buy more rather than exit and wait.

High-Net-Worth Clients Divided into Three Groups: Aggressive, Wait-and-See, Defensive

Stephen Parker, Co-Head of Global Investment Strategy at JPMorgan Private Bank, pointed out that high-net-worth clients with assets over $5 million generally fall into three categories:

1. Aggressive Group: View the downturn as a favorable entry point;
2. Wait-and-See Group: Holding cash and waiting to deploy;
3. Defensive Group: Seeking asset defensiveness and risk diversification.

Parker added, "Since the beginning of the year, we've been advising clients to increase their gold allocation and consider investing outside the U.S., particularly in Europe."

Market Data: Stock Market Plummets but No Full Capitulation

According to Reuters, since President Trump announced the tariff policy on April 2, the S&P 500 index has fallen 12.1% and dropped below 5,000 points on April 8, reaching a new low for the year. Dow Jones futures once fell over 800 points, and the VIX fear index soared to 60, indicating extreme market tension.

However, Kevin Gordon, Senior Investment Strategist at Charles Schwab, pointed out, "We have yet to see retail investors capitulate, which is noteworthy."

Data from Ned Davis Research shows that 48.2% of U.S. household financial assets are allocated to stocks, higher than the 37.8% before the 2008 financial crisis. This means that if households reduce spending, it will have a greater impact on the stock market and economy.

Advisor Recommendations: Increase Cash Allocation, Avoid Emotional Decisions

In response to market volatility, Paul Beland, Global Head of Research at CFRA Wealth Management, advised, "Now is a good time to accumulate cash so you can seize opportunities when bargains appear."

CFRA recently recommended clients increase their cash allocation from 5% to 10% and reduce bond allocation from 30% to 25%. Beland emphasized, "This is not a full market exit but a way to maintain flexibility amid uncertainty."

Malcolm Polley of Stratos Investment Management reminded, "It's difficult to move from cash back into the market quickly enough when it rebounds, so the focus now is on avoiding foolish mistakes."

References

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