How to Survive Trumpflation 2025 for Long-Term Investors

2025 is feeling more and more like 2022 for investors. As of March 2025, the S&P500 hit a massive correction cycle. We will likely be here through Q3 2025.

2023 seemed like a long time ago. The market rebounded and Nvidia $NVDA started to take off. Consumer savings were down, debt was up, yet consumer confidence gained. It was a year of pure American revenge-spending resilience. 2024 followed by a long-awaited shift in monetary policy. The Fed claimed an early victory against a recession that was long denied and all seemed to be leaning on our collective favor. Until…

Housing demand stayed flat. Inflation spiked once again. Layoffs continued under the banner of an election year. All of which, capped off with a stellar Tesla/Bitcoin run. I should have known that two positive Nvidia earning reports amounted to the market fizzling out in favor of speculative gambling. We were cooking and now we are overdone.

This is an update to How Much Money Can You Make Investing in the S&P 500 through 2030.

The Great Moderation for Investors

Forbes is calling 2025, the “Great Moderation.” There is always a cool new financial phrase.

The year’s outlook looks as grim as your weekly grocery run. It’s expensive out here. The psychological toll is worse. While federal workers were forced to make tough retirement or reduction in force decisions, it’s not business as 2019 usual anymore.

The economy and markets aren’t normalizing after years of volatility. A lot of storefronts remain closed. Enticed by social media wealth, younger employees aren’t coming back. And, the aftermath of 100 days of Trump 2.0 is showing signs of fatigue.

To be fair, Trump’s base is still along for the ride as his popularity remains the same (40%-45% approval).

The first presidential address received a 76% approval rating. I thought it was lacking but then again his speeches work for his audience. As a former VP of education for Toastmasters’ International Inc., I can tell you that his speeches could be better. Instead of leaning toward sympathy for the economic strains that most households are in, he opts to double down on decisions that will make things worse. Thus it was a very MID speech to quote the youngins. It was a very long speech but still very mid.

The current forecast is grim with a chance of tariff wars through 2026.

The market suggests a year of transition. Your best bet is to remain cash-heavy for large correction opportunities. When possible, stick with caution. The world is in flux. Continue to dollar cost average into the market while revisiting our portfolio’s diversification.

Strategic focuses for investors

For long-term investors, your 2025 portfolio should align with your goals and exit strategies. Here’s a list of the four simplified principles to survive the financial storm:

1. Dollar-cost-average (DCA): As stated by Barron, “Dollar-cost averaging is an age-old investing tactic that can be particularly effective in volatile markets. In down markets, it can force you to buy equities at bargain-basement prices when other investors are sitting on their wallets or, worse, selling. In up markets, dollar-cost averaging protects you from betting all your chips only to see them tumble in value.”
2. Diversify helps: High concentrated performance among a few stocks in recent years led to volatile exposure. Know your asset classes, sectors, and geographies. Aim to buy undervalued and underperforming sectors due for a rebound.
3. Always focus on your entrance and exit strategy: Avoid rearview mirror investing where you consider last year’s wins as a foregone conclusion. Try not to jump into anything just because the grass seems greener. Past performance doesn’t guarantee future success. No one knows the future; however, your odds of success may increase and normalize with a longer timeline. Just one of the reasons, why you should consider being a long-term investor versus a short-term gambler.
4. Get prepared and stay prepared for volatility: When times are good people get fat and happy. Sequentially, when times get harder, people find it hard to ween and lean into austerity. Let this time, be the last time. While the economy is in growth mode, pocket some wins and double down on your emergency savings strategy. When markets into correction or moderation mode, opt to be resilient and avoid panic selling.
5. The allure of the fixed-income: I call it alluring because when times are lean, bonds look sexier than falling further into the read. However, as with all things, be mindful not to fall into the pattern of running from asset class to asset class. You can’t time the market. Many investors lost out being in 80% in bonds in 2023 and 2024, out of fear of recession alarming losses. Fixed-income investments (i.e. dividends) do have a place in your portfolio. If only to buy you time and keep you calm while markets go red. Besides, “The U.S. economy is presently in an “uneasy equilibrium,” but President Donald Trump’s policy agenda could stoke inflation and result in a higher rate environment.”
6. Stay informed but walk outside a bit: Being informed about domestic and global geopolitical risks is great. Just don’t overdo it. There is such a thing as information overload and financial information fatigue. Especially with volatility trending downwards. This too shall pass as Gandalf would say. Rising unemployment rates and a reversion of the yield curve often precede recessions and are not sexy topics at the dinner table or anywhere. Again, if it helps, the S&P 500 returned a geometric average of 9.80% annualized between 1928 and 2023.

About Author

Lawrence Gonzalez

See author's posts