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Donald Trump’s latest wave of tariffs is sending shockwaves through world economies, drawing comparisons to the infamous Smoot-Hawley Tariff Act of the 1930s.
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Back then, protectionist policies triggered a global trade war, deepened the Great Depression, and led to nearly a decade of stagnant stock market growth. Long-term investors were left watching their portfolios go nowhere for years. So, are we heading down the same path?
And more importantly, is it time to rethink your investment strategy?
History offers some clear warning signs.
The Smoot-Hawley Act of 1930 slapped higher tariffs on over 20,000 imported goods. The world retaliated, trade collapsed, and what started as a financial crisis spiralled into a prolonged economic disaster.
The Dow Jones paid the price, failing to break its 1937 high until 1946.
Why? Because slowing global trade creates weaker economic conditions, and markets have always thrived on growth – not stagnation.
Fast forward to Trump’s first presidency in 2018, when tariffs were again the weapon of choice. The result? The Dow Jones found itself stuck in a sideways grind around 25,000 for over four years. The pattern is clear – tariffs slow down future stock gains. So, what’s your plan to navigate what could be another era of sluggish returns?
The old buy-and-hold strategy might not be your best bet in the years ahead. Instead, a more active approach could be the key. And before you think this requires a PhD in rocket science, think again. A few simple rules and the right education can help you ride the market’s upswings while sidestepping inevitable downturns.
If history is about to repeat itself, wouldn’t you rather be prepared?
What are the best and worst-performing sectors this week?
The best-performing sectors include Communication Services up over on1%, followed by Utilities and Healthcare, both up under half a percent. The worst-performing sectors in Week 14 include Materials and Energy, both down over 5%, followed by Information Technology, down over 2%.
The best-performing stocks in the ASX 100 include Fisher & Paykel Healthcare, up over 5%. followed by Commonwealth Bank, up over 3%, and Coles, up over 2%.
The worst-performing stocks include Pilbara Minerals, down over 21%, followed by Mineral Resources, down over 16%, and IGO Limited, down over 15%.
What’s next for the Australian stock market?
Sellers took control this week, driving the All-Ordinaries Index down more than 2.5% on Trump’s announcement of global reciprocal tariffs.
Right now, any negative news is shaking investor confidence, particularly among institutional players, seeing the index swinging like a yoyo.
But is there a silver lining hidden in plain sight? Let’s break it down.
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Despite heightened volatility and global uncertainty, the All Ords has yet to break its March 14 low. With the level of selling pressure, you’d expect that low to have been taken out by now to resume the downtrend.
But it hasn’t – and that’s a crucial signal.
If the index can hold above 7,949.90 despite the current turmoil, it would suggest that a major low is in place and that the market is setting up for an upward move towards the 8,400 level.
However, if sellers push and close the index below 7,949.90, we could see further short-term indecision before support forms over the next couple of months. A decisive break below 7,800 would open the door to a deeper pullback toward 7,400, although this remains the less likely scenario.
Regardless of the broader market swings, there are still standout stocks bucking the trend. The key is digging in and finding those outlier opportunities.
For now, good luck and good trading.
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Disclaimer: While Wealth Within holds an Australian Financial Services License (AFSL:226347) the information featured in this program is general in nature and therefore should not be relied upon. Before making any investment decisions, you should consult a licensed professional who can advise whether your investment decisions are appropriate for you.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au.
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.
