Crypto News: Tips for navigating a Trump slump

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You need to prepare for the possibility of a Trump slump.

Whatever your politics, the mood in markets has shifted. Disappointing reports on the health of retail, services and housing hit stocks and bond yields this week. Consumer confidence is down by the most since August 2021. Bitcoin has slumped. And there's growing concern policies from the new Trump administration, including the threat of higher tariffs, could spur inflation and an economic slowdown.

You could call it jitters. You could say it's early days into the Trump presidency. You could even say a lot of the S&P 500's decline is waning optimism around artificial intelligence. But the downward moves are at least some indication investors are paring back bets on a Trump bump.

What to do? Step one is to read this comprehensive guide to investing in today's uncertain environment. Yes, you'll see in it suggestions of sticking with large-cap tech and other US stocks. But also emerging is the theme of safety, which shows up in a call to park money in the 10-year Treasury.

Step two is to digest advice from financial advisers I got in response to this note from a subscriber who said he wasn't sure how to prepare his portfolio for good times and bad. Here's what he wrote:

Where do you think a 25-year-old high earner, not rich yet HENRY like me should stick my money? I have roughly $1m in investable assets, and it's super concentrated in SPY (the ETF tracking the performance of the S&P 500) and the restricted stock units (RSUs) from my big corporate job. I also have some Bitcoin, but I'm feeling uneasy about my current capital allocation.
I think inflation under the new administration is very likely, so I'm hesitant to hold T Bills. I also think that the SPY gravy train can't go on forever, and I'm increasingly worried about a huge pop for some reason. Long story short, I don't know what to do. I'm doing "the right thing" insofar as the common financial advice goes, but I'm probably more risk-averse than most people my age are, and I'm not sure what to do.

I called five financial advisers from different parts of the country on Wednesday. Here is what they said:

"The red flag here is that this person knows their wealth is tied up with this big corporate job and they don't have a plan," said Leibel Sternbach, founder of the firm Yields for You in Melville, New York. "What happens if you get fired, what happens if the market goes down by 50%?"

For this investor, Sternbach recommended setting aside around two years of living expenses in low-risk investments like Treasuries. That way if this person loses his job or needs to spend his money, at least he's not tapping into those SPY or RSU funds. Two years is a lot of cash to set aside, but it would give this HENRY enough time to wait out finding another high-paying job or a market recovery in the event of a downturn.

Daniel Milks, founder of Woodmark Advisors in Greenville, South Carolina, told me this investor might want to check his doubts about the S&P 500. Sure, it's slipped in recent days. And it may well go down more if conditions deteriorate. But over the long run, the market's performance has been incredible, recovering even in the face of the Great Depression, World War II, the Korean War, the Great Recession, you name it. This 25 year old has a long time horizon and would be wise to stay in the market.

That said, Filip Telibasa, owner of Benzina Wealth in Sarasota, Florida, said this subscriber's RSUs were something of a yellow flag. He would encourage the reader to diversify when he gets the chance because more than just equity return is riding on that company stock. If it goes down, there's a chance his income, job and health insurance could also go with it. This is part of the reason Telibasa recommended selling RSUs when they vest.

One strategy he says the reader might think about is implementing a backdoor Roth IRA. This move allows investors with incomes that normally preclude them from contributing to do so by converting traditional IRAs to Roths. If investors follow all the rules, their money will grow tax free.

Big picture, John Boyd of MDRN Wealth in Los Angeles says that with a lot of HENRYs, "their risk appetite often resembles that of a 90-year-old grandparent." He'll see such investors on track with their retirement accounts, totally covered for emergencies, and still sitting on hundreds of thousands of dollars in savings accounts. Even in times of uncertainty, using that money for medium-term goals like starting businesses, changing jobs, even having one spouse work less or not at all can have positive financial and personal results. They may not be immediately clear on paper and can require taking some risk, an aversion to which Boyd works to counter.

"I tell them, 'Hey, you are a high-performing individual. You clearly have talent to earn this type of money. If you go start a venture and you fall on your face, I'm not necessarily worried about you not being able to figure it out after that.'"

Relatedly, I'll give the last word to CJ Stermetz, founder EquityFTW in San Jose, California.

"Out-of-the-box ideas are a waste of time for most early career HENRYs," said Stermetz, who said he sees young workers pitched on ideas like short-term rentals, side hustles and storage-unit businesses all the time.

"If you just focus all your mental energy on being good at your job, your return on investment from those efforts will be so much greater than the return on investment of random other investments that you see online," he said.

That rings particularly true in a economic environment that looks as if it could become shakier than many workers would like. — Charlie Wells

P.S. Send questions about your own financial dilemmas to bbgwealth@bloomberg.net. We may get expert answers for you, and feature your question and the answer in an upcoming newsletter.

Market Moves

Nvidia left bulls wanting. Investors hoping the chipmaker's earnings report would rejuvenate the artificial intelligence trade didn't exactly get the results they wanted. Nvidia posted a beat that fell short of the company's typical blowout numbers and gave a mixed outlook for next quarter. Shares fell 3.3%.

Oil dipped to a new 2025 low. West Texas Intermediate retreated Wednesday to settle further below $69 a barrel at the lowest closing price this year, following a choppy session in which thin volumes amplified swings. The uncertainty over Trump's actions and the threat of multiple international trade wars have cast a pall over the outlooks for economic growth and energy demand in both the US and China, the world's two largest consumers of crude.

Wealth Gains

The biggest gainers and losers on the Bloomberg Billionaires Index over the past week:

Chen Tianshi was the biggest gainer in percentage terms. Chen is co-founder and chairman of Cambricon Technologies, a producer of artificial intelligence computing chips based in Beijing. His wealth rose 27% to $13.2 billion. The majority of Chen's fortune is derived from his stake in Cambricon, which rose this week on optimism around Chinese tech.

Adam Foroughi lost the most in percentage terms. Foroughi is the chairman and chief executive officer of AppLovin, a mobile technology and digital marketing company. He clocked a 33% loss that took his wealth down to $18.5 billion. The majority of Foroughi's fortune is derived from his stake in AppLovin, which sank this week as short sellers targeted the company.

Real Estate Watch

Silicon Valley Sees Bidding Wars on $4 Million Fixer-Uppers

Housing in San Jose, California Photographer: David Paul Morris/Bloomberg

High mortgage rates may be snuffing out demand for homes elsewhere in the US, but for the area's many software engineers riding the tech stock boom, and crypto millionaires cashing in gains, none of that matters.

The housing market that includes much of Silicon Valley ranks as the most competitive in the US, according to a Zillow analysis of the 50 biggest metro areas. With an economy turbocharged by the artificial intelligence boom, and a severely limited supply of listings, the San Jose region is also in the lead for home-value growth.

Blackstone Buys Superyacht and Marina Servicer for $5.65 Billion

Photographer: Eva Marie Uzcategui/Bloomberg

A unit of Blackstone agreed to acquire a marina and yacht servicing business for $5.65 billion in a bet on US boaters. Sun Communities is selling Safe Harbor Marinas to affiliates of Blackstone Infrastructure in an all-cash transaction, according to a statement Monday. The price, which is subject to post-closing adjustments, is roughly 21 times Safe Harbor's 2024 funds from operations, Sun Communities said.

While boat sales tend to ebb and flow with consumer sentiment, storage slips tend to be in short supply in all economies, creating opportunities for marina owners to modernize properties and drive higher rents. A trend toward larger superyachts with richer owners has also created opportunities for marinas to sell more services.

Know Anyone Who…?

This week we're looking to speak with people who bought Bitcoin at $100,000.

Some of our best journalism at Bloomberg Wealth comes from your own stories and we'd love to hear from you, your friends or clients. Please email bbgwealth@bloomberg.net if you'd like to get in touch.