A Potential Trade War Explained Through a Really Stupid Analogy

Life throws you strange curveballs sometimes, but mostly you just roll with it, you know. Until you start to catch on that things quite possibly aren't the way they ought to be.

Take my buddy who has me over for dinner all the time. Great food, warm company. Yet, every single time he hands me a bill for $30 after the meal. It's always been this way. Although, I will admit, even though I have always just gone along with it, for years it always left me a bit flabbergasted. Especially considering when he eats at my place, he's treated to a free meal.

So naturally, one day I asked him about it. He casually explained, "It's just the cost of having dinner at my house." And sure, he's a phenomenal cook, so I let it slide. But after dozens of $30 dinners, I couldn't hold back anymore. I finally said, "But when you come over to my house for dinner, I don't charge you a dime!"

He shrugged and said, "That's just the deal. You eat in my house, you pay. I eat in your house, I pay nothing."

Oh really? So, I replied, "Alright, fine. Fair enough. From now on, I'm charging you $15 for dinner at my place."

Cue absolute chaos. He slammed the table, his face turned red, and he shouted that he'd burn my house down if I dared charge him. "That's it!" he roared. "If you're going to charge me $15, then I'm raising my price to $45. Either I keep eating for free, or we're going to have some serious issues!"

Enter the ye olde record scratch here.

Does this sound familiar? That's how tariffs play out on the world stage. The United States is simply tired of footing the bill while others dine on the house. Is it coming into focus now? Or do we need another analogy? 

Dinner's on me. Well, so long as you give me $15 or until we renegotiate the terms of our dinner arrangements. 

Like the things I write about or the way I write about them? Follow me on my Facebook page to keep up with the latest writings wherever I may write them. Want to support this blog to help keep great posts coming, check out my Amazon link.

© 2025 Jim Bauer

What About Retirees? Is Waiting for the Market Rebound Sage Advice?

When it comes to many things in life, there's always a caveat. And this week's turmoil in the stock market is no exception. Portfolios across every sector have taken a massive hit, and while it's sensible advice to urge people not to panic, not to sell, and to ride out the storm while taking advantage of dips for potential long-term gains, context matters. That's easy enough for someone like me—a 51-year-old with years ahead of me before I'll be fully (or even mostly) reliant on these funds in retirement—to say.

For those with time on their side, all the standard wisdom applies. Don't sell anything, stay the course, and consider increasing contribution percentages to retirement accounts like 401ks. This advice, grounded in years of experience navigating market cycles, acknowledges that while downturns are tough, markets have always historically rebounded—not just to prior levels, but to new highs beyond the point of the initial decline.

However, this advice is tailored to those still working or those not yet needing to draw on their investments. They have the benefit of time to weather short term losses on paper and emerge stronger on the other side.

But what about retirees, like grandad, who are already drawing on their funds? For them, it's a different story. Ideally, much of their money would have already been shifted from stocks into less volatile options like annuities, bonds, or other fixed-income investments. Still, many retirees leave a significant portion of their portfolios in the market, and they face a much harder road—they don't have the luxury of time to simply wait out the storm.

It hasn't always been this way. Over the last half-century, things have shifted dramatically—retirements today are increasingly tied to the stock market. With traditional pensions largely a thing of the past, most people now rely heavily on the money they've earned and saved, money that's directly linked to the market's performance. And while history shows that markets typically perform well over time, there are moments when of course they don't, even if they are just short-term blips. 

Beyond those already in their retirement years, my heart goes out most who are on the cusp of retiring. Think of the many baby boomers who are just now reaching this pivotal moment, preparing to leave the workforce. They face some of the toughest decisions right now, caught in the middle of the market's turmoil. Many haven't yet transitioned their portfolios into less volatile investments, and with their portfolios' current diminished value, making that shift now isn't an attractive option.

Several years may have just been added to their time at work.

This situation, however, presents a valuable opportunity for those who still have ample time ahead to start thinking more strategically about their retirements. It's an ideal moment to begin crafting better plans, especially by considering contingencies. For instance, how would you navigate the scenario if the markets fail to cooperate, whether just before you are set to retire or even after you've already entered retirement?

Planning for contingencies is a fundamental part of life, and retirement should be no exception. In fact, this becomes especially critical in retirement, where options to bridge financial gaps are more limited, making careful preparation all the more essential.

One prudent strategy to consider is to allocate at least three years' worth of anticipated retirement income into investments outside of the stock market. Think of it as a retirement emergency fund, providing a cushion and the flexibility to weather market downturns without having to make hasty, unfavorable decisions.

This one small consideration allows you to protect your overall retirement plan, reducing the short-term impact of market volatility and safeguarding your long-term financial outlook.

Imagine those nearing retirement right now, caught in the midst of this steep market downturn. If a three-year retirement emergency fund were already in place, their plans wouldn't be as heavily influenced by current market conditions. Instead, the fund would provide them with the flexibility and breathing room needed for markets to stabilize, allowing their retirement goals to remain on track.

No matter where someone stands, the game of life is always evolving. That's why I have never been a fan of the "set it and forget it" approach. Life doesn't ever follow a straight line—it requires flexibility, the ability to pivot, and to zigzag when necessary. 

Again, my thoughts go out to those facing tough decisions right now—they're the ones we often don't think about when the markets give you reason to gulp very hard—potentially having to alter their plans, especially those who no longer have the option to make broader adjustments. It's why I so strongly advocate for careful and thoughtful planning in advance. Moments like this serve as invaluable reminders of the importance of preparation, offering opportunities for reflection and encouraging people to consider their strategies more critically.

Too often we fall into the trap of oversimplifying: "If you just do X, everything will fall into place." But more often than not, reality is more nuanced. This truth becomes glaringly apparent during moments like these, when oversimplified approaches reveal their limitations.

For example, take the age-old idea that if all you do is put everything into an S&P 500 tracking fund, you will retire a millionaire, and everything will work itself out. It's mostly true. But today, for those who are expecting those funds to be there, they now have less funds for that reality to hold true right now. In this exact moment.

This is one of the moments when you have to be able to zigzag. Because again, such thinking only holds true if you have the luxury of time for the idea to reach its full potential to be true. That time is before, when you're actively working toward retirement, not approaching it or already navigating its complexities.

That's the caveat to all of the other otherwise sound advice about what to do when the markets decide to go south.

This advice can't offer much to help anyone caught up in the current market downturn. But it can be helpful to anyone currently planning their retirements, because the markets will rebound, just like they always do, but eventually, like the markets also always do, they will also retract.

Like the things I write about or the way I write about them? Follow me on my Facebook page to keep up with the latest writings wherever I may write them. You can also follow me X at @jimbauer601. Want to support this blog and help to keep valuable posts and commentary coming? Check out my Amazon affiliate link. Any support is always greatly appreciated.

© 2025 Jim Bauer