‘It’s come to an end’: Bombshell investing claim amid Trump tariffs

The days of relying on this tried and tested investment strategy are over, experts have warned.

The days of ‘set-and-forget’ investment have come to an end, experts have warned, as stock markets continue reverberating from the turmoil unleashed by US President Donald Trump.

The tried and tested approach is no longer viable in today’s evolving market, which is shifting away from globalisation, leading to lower returns for those who adopt the passive strategy, fund managers have claimed.

Talaria Capital’s co-chief investment officer Hugh Selby-Smith told The Australian, “there’s been times when equity markets have gone down 50 per cent or more” over the last three decades.

“But as long as you could hold and continue to invest effectively, things just got more expensive,” he said.

“That tailwind of people being prepared to pay more for the same asset has probably come to an end”.

The days of ‘set-and-forget’ investment have come to an end. Picture: AP/Richard Drew

Instead, Mr Selby-Smith suggested active investors will come out on top.

He explained the move away from globalisation “means the cost of finance won’t keep going down”.

“And the trend of continued nominal cash flow growth relative to expectations is coming to an end because costs will go up. So nominal growth and the cost of capital are no longer diverging.”

He said worst case scenario, “we could be moving into a period where there’s a headwind to assets getting more and more expensive on a go-forward basis, and that really changes the return profile”.

Mr Trump sent financial markets into a tailspin earlier this month when he announced sweeping import taxes on dozens of trade partners, only to abruptly roll them back less than 14 hours later to 10 per cent for 90 days – while also raising levies on goods from China.

The standoff China and the US has further rattled markets and sparked global recession fears.

Mr Trump sent financial markets into a tailspin when he announced sweeping import taxes on dozens of trade partners. Picture: Roberto Schmidt/AFP

Australia’s stock market recovers from sharp fall

The Australian sharemarket overcame a sell-off on Wall Street on Tuesday after wild comments from Mr Trump spooked global markets.

The benchmark ASX 200 index closed marginally lower by just 2.40 points or 0.03 per cent, to 7,816.70, after recovering from a near 1.3 per cent slump at the start of trading.

The broader All Ordinaries also closed lower on Tuesday, down 8.20 points or 0.10 per cent to 8,013.70.

The Australian dollar hit a four and a half month high against the greenback and was buying 64.27 US cents.

On a mixed day for investors, only three of the 11 sectors finished up, but it was the industry heavyweights, including Australia’s largest bank and miners that pulled the ASX 200 into the green.

The local market initially tracked heavy losses on Wall Street after the three major indexes plunged by as much as 2.5 per cent, but recovered through the afternoon trading.

CBA shares soared 4.19 per cent to $168.00 while Macquarie Group jumped 0.56 per cent to close Tuesday’s trading at $180.830, after it offloaded its offshore asset management business for $2.8bn.

Westpac also gained marginally up 0.096 per cent to $31.18 while ANZ and NAB closed the day in the red.

Stock markets were initially spooked when Mr Trump publicly labelled US Federal Reserve chair Jerome Powell “a major loser” for not lowering interest rates and called for him to lose his job.

“There can be a slowing of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” the President wrote on social media.

The Australian sharemarket overcame a sell-off on Wall Street. Picture: Michael M. Santiago/Getty/AFP

Investors looking for “calmer waters”

IG market analyst Tony Sycamore said global investors are looking for “calmer waters” outside of the US as investors are struggling to trust the independence of the US Federal Reserve.

“I feel like it’s now ‘get me out of all US dollar assets’ to the point where inventors are looking to put their money anywhere but the US.

“That obviously followed the very public spat with Mt Trump calling for the sacking of [US Fed chair Jerome] Powell.

“What it’s done is basically undermine the Fed’s ability to act independently in the eyes of offshore investors.”

Mr Sycamore said this is another blow for investors who struggled through Mr Trump’s aggressive tariff policies, which investors fear could drag the US and potentially other global markets into a recession.

“To me we are now looking at safe havens that don’t include anything to do with US assets.”

Mr Trump has since walked back his comments about Mr Powell, telling reporters in the Oval Office on Tuesday, US time, he has “no intention of firing him”.

“I would like to see him be a little more active in terms of his idea to lower interest rates,” he added.

– With AFP and NCA NewsWire

Originally published as ‘It’s come to an end’: Bombshell investing claim amid Trump tariffs