Trump’s New Tariff Policy and Stock Market Plunge
After Trump announced the latest tariff policy, the global stock market plummeted. So far this year, the market has lost 20%. Although I am not panicked, this experience made me deeply understand one principle: a certain amount of cash must be maintained in the investment portfolio.
Market Surprises Always Arrive Unexpectedly
The market always experiences various surprises, once every few years. For example, the 2008 financial crisis, the 2015 market crash, the 2020 Wuhan pneumonia, and even the 2025 economic world war. Every market plunge is an excellent buying opportunity. The market is filled with cheap assets; if you don’t have cash in hand, you might miss the chance to get rich.
The Importance of Holding Cash
When the market is running well, the cash in your hand makes you feel very uncomfortable, because you are watching profits slip away. However, if you have enough discipline, this cash can bring you greater returns in the future. This is the important reason why you must allocate cash in your portfolio. Of course, there is also a less important reason: when you need cash, you don’t have to be forced to sell assets.
You might think, why hold cash when the market is good? After all, watching others make money while you are doing nothing, that feeling is truly unpleasant. But remember, market volatility is the norm, and cash allows you to seize opportunities at critical moments. More importantly, it brings you inner peace and security. 😚