President Trump at April\u2019s \u201cliberation day\u201d tariff announcement at the White House, which plunged markets into turmoil. – AFP via Getty Images <\/p>\n
Beware our \u201cMarie Antoinette\u201d market.<\/p>\n
Poor Marie Antoinette. The late French queen is best known for her supposedly callous, clueless, privileged suggestion that if the peasants couldn\u2019t get enough bread, they should eat cake instead.<\/p>\n
Actually, she probably never said it. But so often, it\u2019s not what you said \u2014 it\u2019s what people think you said that gets you into trouble.<\/p>\n
And at the start of a new year, as U.S. investors eagerly take on high levels of risk in their retirement portfolios, it\u2019s worth pointing out: This is a Marie Antoinette market.<\/p>\n
Last April, when President Trump\u2019s \u201cliberation day\u201d tariff announcement shook up the stock market, the president himself called American investors \u201cweak\u201d and \u201cstupid\u201d for panicking and bailing out of the market<\/a>.<\/p>\n Erstwhile\u00a0MAGA congresswoman Marjorie Taylor Greene called people who were panicking \u201closers\u201d and \u201cfailures.\u201d<\/a><\/p>\n And Treasury Secretary Scott Bessent said people thinking about retirement weren\u2019t worried about \u201cday-today fluctuations\u201d in the market<\/a> \u2014 such as, oh, a 4,000-point plunge in the Dow Jones Industrial Average DJIA in a couple of days.<\/p>\n Trump, of course, is worth billions of dollars. Ditto Scott Bessent. Even Taylor Greene is worth about $25 million, mostly from inheritance.<\/p>\n For people who are rich, their comments \u2014 or at least their implied advice \u2014 is absolutely right. Someone with $25 million, or $1 billion, has no particular reason to worry unduly about daily fluctuations in the stock market, or to panic. Actually, if you\u2019re rich, volatility is your friend, not your enemy: It lets you buy up more stocks on the cheap. Taylor Greene, presumably without any inside information whatsoever, did just that in the days before President Trump suddenly reversed his crayon-based trade-policy plan. Good for her.<\/p>\n These comments, incidentally, aren\u2019t isolated. Who can forget Commerce Secretary Howard Lutnick\u2019s remark that it would be no biggie if they just stopped sending out Social Security checks for a month? Only fraudsters would complain, he said, while honest retirees would just shrug off a month\u2019s delay in their checks. His evidence: His mother-in-law<\/a>. To put it another way, Lutnick\u2019s evidence \u2014 anecdotal, at that \u2014 consisted of a woman with a billionaire hedge-fund manager for a son-in-law. If she can cope without a Social Security check for one month, who can\u2019t?<\/p>\n Story Continues <\/p>\n Like I said, poor Marie Antoinette. These folks are way beyond asking if the boulangeries are out of brioche as well as baguettes. (Oh, and in France before the revolution, the super-rich aristocrats didn\u2019t have to pay much tax either \u2014 another parallel with our modern utopia.)<\/p>\n The rest of us need to bear this issue closely in mind this year. The people controlling the commanding heights of the economy and politics are not in the same boat as the rest of us. It\u2019s not a matter of whether or not they are \u201cbad\u201d people or \u201cstupid\u201d (the latter is unlikely, but not impossible). They live in a world where a financial panic is a buying opportunity.<\/p>\n A timely reminder comes in the Corporate and Business Law Journal, where professor Samantha Prince of Penn State Dickinson Law points out all the ways in which volatility is the enemy, not the friend, of the ordinary stock-market investor<\/a>.<\/p>\n For most people, their 401(k) plan isn\u2019t just a long-term investment account. It is also a potential lifeline, Prince notes \u2014 citing, among other issues, the important legal options to take hardship withdrawals without penalties, and to borrow up to 50% of the balance, up to a maximum of $50,000, in the case of emergencies.<\/p>\n When the stock market falls by 20% or 30% or 50%, people don\u2019t just sell because of irrational fear. They also sell because of rational fear: The fear that it could fall further, and not recover in time.<\/p>\n That\u2019s when a \u201ccollege\u201d fund becomes a \u201crefrigerator college\u201d fund<\/a>, and a retirement fund becomes an income-support fund for a store greeter.<\/p>\n These things don\u2019t usually happen to people with spare billions.<\/p>\n Millions of ordinary Americans pulled money from their stock and bond funds during the turmoil last April. Surely not all of them were \u201cweak,\u201d \u201cstupid,\u201d \u201closers\u201d and \u201cfailures\u201d?<\/p>\n