For those of us who are not familiar with the phrase, Pandora’s box, or perhaps never understood the meaning of the phrase, let’s allow greekmyths.com and dictionary.com to help educate us.
In classical Greek mythology, Zeus gave Pandora, the first woman, a box, with strict instructions that she not open it. Pandora's curiosity soon got the better of her, and she opened the box and all the evils and miseries of the world flew out to afflict humanity. Dictionary.com says Pandora's box “is a noun that relates to a process that generates many complicated problems as the result of unwise interference in something.”
I suggest that Pandora’s Box is akin to President Donald Trump announcing tariffs (essentially taxes) of 25% on $300 billion of Chinese goods. If that was not enough to upset Pandora, POTUS recently threatened Mexico with 5% tariffs on its imports, to be implemented on June 10, unless it could stem the flow of migrants to the southern U.S. border. Please understand that I am not suggesting that the tariff maneuver is unwise or foolish. What I am saying, however, is that we opened Pandora’s box (trade war), and the stock market ain’t happy, indicative of the market (S&P 500) delivering its worst May return in seven years, falling 6.6%. According to the talking heads, the culprit is Pandora’s box … I mean ... tariffs.
Much of the financial rhetoric, as it relates to tariffs, is negative, but is a trade war a necessary evil to “protect” the USA? Of course, I have my opinion, but I would not dare make it public! Ha! Nevertheless, our good friends who control interest rates, the Federal Reserve, is back in the spotlight in a significant way, as the self-proclaimed gurus argue that the Federal Reserve must do an about face and lower interest rates to help offset a potential recession due to the tariffs. I feel like I am living in the Land of Oz and the Fed is the all-powerful wizard in control!
Nevertheless, maybe like you, I am frustrated, annoyed, discouraged and upset about what has happened during the past 30 days or so, but this type of volatility and unpredictability is the nature of the beast (stock market). I would like to remind you and me that we have faced and overcame other challenges, under far worse circumstances. History is loaded with examples of financial failures and market crises, all of which seemed dire at the time, but none of which derailed the U.S. or the global economy. In fact, the market recovery after many of these events was strong, swift and unexpected. I want to remind you that, of course, there is no guarantee that the market may perform in a similar manner under similar circumstances in the future.
If you are losing sleep because of your exposure to stocks and the uncertainty in the economy, then it might be a good time to consider tweaking your asset allocation, as things could get a lot worse before we stabilize and move higher again. I encourage you not to join the doom gloom crowd, while becoming a curmudgeon (look it up), like the person hacking with a bad cough, and his friend asking, “How long have you been sick, Tommy?” In three weeks, it will be a month! Now that is negative complainer! I, on the other hand, will patiently wait for Dorothy to click her ruby slippers together and bring us back to reality.
Harry Pappas Jr. CFP®
Managing Director-Investments
