Many people are currently perplexed by the ongoing economic changes:
- Why is Donald Trump imposing new tariffs almost worldwide?
- Are we heading into a recession?
- Does Donald Trump understand the implications of his actions?
For those of us with lives outside the realm of politics, grasping the full scope of these developments can be challenging, especially since most mass media are not a reliable source of information (and most people only consume them!).
Fortunately, some insightful videos are emerging that offer more than just criticism of Trump. These videos attempt to explain the possible rationale behind these sweeping changes. Here is one I personally loved:
Video Summary: Chat GPT
While the YouTuber may not have all the answers, the video highlights that:
- Donald Trump is acting according to a plan.
- The strategy is influenced by key advisers Scott Bessent and Steven Miran.
- A new world economic order is on the horizon.
The question is no longer whether a new world economic order will happen, but rather that we are already transitioning into a new one, no matter what. The only thing we can do is accept it.
Thus, we might as well start referring to this era as the “Trump World Order”—a name he would likely appreciate.
Trump World Order
So what exactly is the plan? There are two key objectives in this envisioned new economic world order:
- Increase US Manufacturing Presence: The goal is to boost domestic production, reducing reliance on foreign manufacturing and strengthening economic independence.
- Depreciate the US Currency: By weakening the US dollar, the strategy aims to make American goods more competitively priced on the global market, potentially boosting exports.
These initiatives are designed to reposition the United States in the global economic arena, reinforcing its competitiveness and strategic economic strengths.
Stock Market Outlook
What’s going to happen with the stock market? Opinions are all over the place. Some predict a great depression, while others foresee just a minor dip before a major bounce back. As usual, nobody really knows, and both sides can find plenty of arguments. So, in the end, none of this really matters.
So, what do I think? I’m calling a downturn of about 22% for SPY and 30% for QQQ over the next four months. What’s my source? “Trust me, bro!” Honestly, just like everyone else, I don’t have a crystal ball—it’s impossible to predict market movements with any real certainty. I just had some line, I don’t know why, drawn on my graph one year ago that was waiting to be hit. I guess that would be the time!
When Should I Sell?
That’s the million-dollar question, isn’t it? Will the market go up, or will it crash more? Right now, it’s all a big question mark.
Personally, I’ve got some leveraged stakes that I’m ready to unload. These are the kind of investments that can either skyrocket or plummet in the blink of an eye.
Here’s a tip: even in a downturn, markets might rally briefly. So, if you’re not sure what to do, watch for SPY potentially hitting around 550 and QQQ maybe reaching about 465 before they might dip again. Keep in mind, these are just current resistance levels; there’s no guarantee the market will bounce to these points or break through them.
For my part, I’m planning to offload some of those high-risk leveraged positions. As for the rest of my portfolio? I’m mostly holding steady, though I might sell a small percentage of my SPY and QQQ if I sense another plunge is on the horizon. Everything depends on the bounce—because it will eventually bounce!
Current Investment (Safe)
When it comes to what I call “safe” investments, my go-tos are SPY and QQQ, which I always recommend.
- SPY: 10% of my portfolio
- QQQ: 10% of my portfolio
I’m gearing up to boost my stakes in these ETFs by another 20% during the market downtrend. How? I’ve set up limit orders that’ll kick in and make purchases automatically when the prices drop to my target levels. This way, I’m dollar-cost averaging (DCA) down my investment, which is a smart move during volatile times.
Why use buy limits? Because I’ve learned it’s just too hard to make those buy decisions on the fly—you always think the market could drop even further.
With over 60% of my capital still free for investing as the market dips, there’s no reason to fret about “losing” money. In fact, it’s actually a reason to be VERY HAPPY—I’m buying stock at a lower prices than those who didn’t sell.
My Current Limit Orders:
I’ve arranged each order to represent 1.25% of my portfolio, with the goal of adding a total of 10% to both SPY and QQQ.
SPY Limit Orders:
513(executed)499(executed)488(executed)- 475
- 464
- 452
- 440
- 428
QQQ Limit Orders:
413(executed)- 399
- 388
- 378
- 367
- 356
- 345
- 335
Will all these orders get filled? I sure hope so! That’s the point of why I sold at the end of December: to buy at a lower price, even if it’s not the perfect price.
Forecast
Something feels weird in the VIX; something is missing. We are missing a big reversal candle so I suspect we will still go down on Monday.
I expect that people coming back from the weekend will want to sell before it’s too late, so I suspect we will start with another big red day (like 3%-4%). Since usually everyone is wrong, here will come my big reversal candle, and we will end the day in the green. I even believe that we will have 3 big green days or maybe even a week before we start dropping again.
Remember, the stock market always bounces! The bigger the drop, the bigger the bounce (and often recovers 50% of the drop before dropping again).
So, if it works like I believe, I plan to buy some 5x leverage (MAG7, QQQ5) that I will sell very quickly through the week. I might even play for fun with some options, as they can offer 20x rewards if I’m right. So, a $10k investment could turn into a $200k profit… not that bad for some gambling!