Markets Rebound: Nasdaq and Bitcoin Bounce Amid Tariff Relief Hints
It has been a few days since I last emailed a newsletter, so I wanted to check in and let everyone know I’m still alive, and I still haven’t made any moves in the market. My goal was to add to the Nasdaq 100 once it entered a 10% correction, and although we got very close, we just never hit that full 10% drawdown.
If we were to experience a full 10% correction in the Nasdaq 100, it would be my non-financial advice to look at other opportunities in the market, such as individual stocks or assets like Bitcoin. Corrections present great opportunities and only come around every so often. So it’s my suggestion to be well prepared and have a plan.
Bitcoin: A Hard Asset with Real Value?
I know there are many people who believe Bitcoin has no intrinsic value. The question is—have they done any substantial research on the asset, or are they simply repeating what they’ve heard?
A popular comparison I hear more and more each day is that Bitcoin is a digital analog version of gold. If that’s true, and if you believe gold has some intrinsic value as a hard asset, then this line of thinking could potentially sway skeptics. Of course, investors like Warren Buffett dismiss gold because it’s not a cash-producing asset, and they apply the same logic to any hard asset, commodity, or Bitcoin. But if someone sees gold as scarce, an inflation hedge, or a store of wealth, they may find Bitcoin even more compelling due to its superior portability, divisibility, and verifiable scarcity.
This leads me to my second point; Should asset managers and businesses hold a pool of hard assets—including Bitcoin—on their balance sheets?
For small businesses in America, inflation is a constant pressure. Just consider the rising costs of employee insurance, which increase substantially each year, or the fact that employees expect salary raises just to keep up with inflation.
So what should businesses do with their cash reserves? Other than reinvesting in growth through mergers, acquisitions, or capital expenditures, businesses typically park excess cash in short-term treasuries, CDs, or money market funds. With rates hovering around 4% today, they’re basically breaking even. A business could also invest in an index fund like the S&P 500, historically returning 8-10% per year.
I think it becomes more clear everyday that holding a percentage of cash reserves into a pool of hard assets like real estate, gold, and Bitcoin should be seriously considered. Having a diversified mix of hard assets should serve as a strategic hedge against inflation and economic uncertainty.
The most important thing to remember—something that needs to be repeated—is that Bitcoin’s demand should outpace supply over time. If that happens, the price will obviously increase, regardless of whether nation-states or the U.S. government eventually adopt Bitcoin as a strategic reserve asset.
Anthony Pompliano recently highlighted this dynamic, showing that ETFs continue to accumulate more Bitcoin regardless of price action. This is key as institutional adoption is occurring, even in a volatile market. However, if we get any new clarity from the White House Crypto Summit on Friday, it would still only be speculation to make short-term moves based on the event. As always, the best approach is to be a long-term buy-and-hold investor with Bitcoin.
Trump’s Macro Playbook: Economic Pain Before the Boom
Recently, President Trump described tariffs on Mexico, Canada, and China as “a little disturbance.” As Josh Brown mentioned in his newsletter today, the phrasing is telling.*
Josh Brown doesn’t believe Trump and his administration are deliberately trying to orchestrate a recession to force the Federal Reserve into cutting interest rates. I completely agree.
However, Trump’s mindset has always been that short-term pain is necessary to achieve long-term gains. We saw this with trade negotiations in his first term, where he didn’t push aggressively in Year 1 but ramped up tariffs and trade disputes later on in his term. This time, I expect a different approach, front-loading economic pain early in his second term rather than waiting two years.
In Trump’s first month, we have seen Government spending cuts through DOGE, Reductions in government jobs, and tough trade negotiations that may slow GDP in the short-term. I will also add the threat of a Government shutdown looms in the shadows.
The psychology behind this is straightforward: By taking the economic hits and uncertainty early, there’s time for negotiation, recovery, and a potential economic boom leading into the back half of his term. Trump envisions a “Golden Age” of economic growth, but he’s likely willing to endure some turbulence to get there.
That said, it’s worth noting that Trump’s 2017 tax cuts remain in place through 2025, and deregulation efforts could help offset some of a potential near-term economic slowdown.
Sit Tight and Let the Market Come to You
As a long-term investor, I know it’s hard to ignore these loud macro headlines and geopolitical noise. I still suggest not letting any of these headlines determine or sway your investing strategy. If that’s either dollar-cost-averaging, or being patient for better stock prices, nothing changes.
I am not in the camp of constantly making moves, trimming profits, or tweaking my portfolio everytime Mr. Market tells you to. That’s a hedge fund mindset, not a retail investor mindset.
My suggestion to sit on your damn hands.
There’s no reason to feel pressured to buy or sell. It’s my opinion doing nothing has been the best approach since Trump has been elected in November 2024.
Also, just to clarify, you don’t have to buy on the first day an index like the Nasdaq 100 corrects. So if you miss it, you miss it. You’ll have plenty of opportunities in your investing career to buy assets cheaper.
Let the market come to you, be patient, even if you’re not a patient person. Investing will teach you to be patient.
Thank you and have a wonderful night.
In Case you Missed it:
References:
https://www.downtownjoshbrown.com/p/new-post-ea0d
https://pomp.substack.com/p/maybe-we-are-getting-a-bitcoin-only
Disclaimer: This blog is for informational purposes only and does not constitute financial advice. All opinions are my own, and I am not a financial advisor. The information provided reflects my personal views and is intended to encourage discussion and thought among readers. Investments involve risk, including the loss of principal, and past performance is not indicative of future results. Always conduct your own research or consult with a qualified professional before making any financial decisions.