I was planning a longer article this week, but it needs more polish, so I’m pivoting to the stock market instead.
Even if you don’t look at stocks every day, you may have heard on the news about a big drop in the indexes after the US took Greenland by force and ended NATO. I subscribe to a few financial newsletters, and they were all saying, “Don’t sell your stocks.” That’s been wise advice as the stock market has been extremely resilient. I would think people would shift their money to a more reliable place. Perhaps that’s part of why the international markets have done so well over the last year.
Rather than just telling people not to sell their stocks, we should emphasize the importance of ‘buying the dip.’ It doesn’t have to be one or the other—it can be both. Still, promoting ‘buy the dip’ effectively encourages holding onto stocks rather than selling.
I’ve found that consistent, small moves—shifting bonds to stocks during these dips—align with the core principle: use volatility as an entry point rather than a reason to panic. My increased willingness to buy the dip, even amid uncertainty about “The Big Drop,” is a practical application of this strategy. Large drops typically take weeks, offering several buy opportunities.
President Trump has caused enough of these dips that it’s earned a nickname. They call it a TACO trade – as in, Trump Always Chickens Out. It happens when Trump comes up with a particularly outlandish idea that is almost universally considered very bad. The market freaks out and Trump changes course. You buy (low) when the market freaks out and sell (high) back into bonds when he comes to his senses.
This week, the TACO trade was just a blip. Almost as soon as the market dropped, reports say Trump saw bond yields rise and changed course. He finally took military force off the table, and it seems like he pretty much got what he had before – the ability to have military bases there for security. He also claims to have gotten some mineral rights, but I don’t expect that to produce anything significant in his lifetime. I’ve read that it’s hard to reach all the minerals beneath the ice. In any case, it seems like it should be considered a bonus if it happens.
In the meantime, I’ll take my small gains. Let’s stay proactive and tackle the next drama sure to arrive in 3… 2… 1…
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