My Prediction on the U.S. Stock Market

And why it matters for conscious people

I am going to start with an unpleasant prediction and then focus on the potential opportunity for those who align with what I’m seeing. I invite you to share this individually with conscious friends and allies rather than broadcast on social media or send to wider lists. I’ll share why later.

The reason I am sharing this prediction is not because I’m an investment advisor (I’m not!) but because I believe the most conscious American citizens are going to be needed in the times ahead. If we are in rough shape economically, we simply can’t be as helpful when that is most required. I want you to have a solid financial foundation as America goes through a dark and difficult period. It’s time to put on our own life vests first.

My specific prediction is that we are going to see something like a 50% decline in the U.S. stock market from its Feb. 19 peak by the end of the summer (if not sooner). So the S&P 500 bottoms in the range of 3000, which is where it was in 2019 before Covid hit. This would be a market decline on the order of what happened in 2008, which took five years to recover from after the first hits began.

This will have a massive effect on the economy as a whole, cascading into layoffs, housing slump and more.

What are my grounds for this prediction?

I believe there is a fundamental error that the United States investment ecosystem is making about the future of US-based stocks. It has nothing to do with the companies or their performance. It’s about failing to envision the full repercussions of the political risks of the moment, which have never happened in our history. There is nothing to benchmark these risks against domestically so they are mostly being ignored.

Simply put, the vast majority of investors are assuming that Trump is just an erratic President rather than an aspiring dictator.

Other nations are not making that mistake, and they are preparing accordingly. I believe that April events are going to make it more clear to the majority of Americans that Trump is serious about his dictatorial ambitions.

An aspiring dictator is no longer working for the good of average U.S. citizens or even the world of investors. He is working to consolidate more and more power. He thus acts in self-interested ways that can, and will, corrode the functioning of important institutions, laws, and protections that are at the heart of our economy and are essential to the trust that global investors have had in us since World War II.

An aspiring dictator can benefit economically and politically even during the crashing of an economy. So his interests no longer align with those of investors or everyday citizens. He can benefit in ways that we cannot.

The point of this article is not to convince you that Trump is an aspiring dictator (you are welcome to your own assessment) but that the market is not pricing in the considerable risk that comes from the chance that he is able to install some form of authoritarian regime in America.

Because they have never considered such a thing possible and there are no comparables in American history for that happening, it is not really factored into stock market pricing. That’s why the investment world is largely missing the potential for a seismic crash of the U.S. economy. Not a correction or a dip or even a garden variety recession. A much more painful crash.

Last Thursday, Canada’s prime minister Mark Carney declared unequivocally that “The era of deep economic, security, and military ties between Canada and the US "is over.”

That statement says a lot. Trump is rapidly erasing global trust in US leadership and tomorrow on “Liberation Day” (April 2) he promises to go further.

If our oldest and closest ally has already declared us untrustworthy, what are others going to think as the trade wars escalate? All signals are that the world is turning away from America’s leadership and that will have profound economic repercussions.

As the world community’s trust in us dwindles, the attractiveness of investing in our markets and companies will go down. As the rule of law degrades with further attacks on lawyers and judges, the safety of investments goes down. As more people are deported or jailed without due process, the trust in our treatment of visitors evaporates. As more people stage some form of boycott of American products our companies become less profitable. It’s a vicious downward spiral.

It’s important to note that 40% of the money currently invested in our stock market comes from foreign investors. Will they keep their money in our market if we continue down the path of other authoritarian regimes?

It’s important to note that Europe’s stock market has been going up while ours has gone down. Here’s an article whose headline is clear, “Investors Flock to Europe as US Exceptionalism Fades.” In that article, they say there is a 40-percentage-point swing in US equity allocation within a month, the largest on record.

On the macro level, the rest of the world has been boosting our perceived success by backing us with their money. More demand for the stock of US companies raises prices and creates wealth for our companies and shareholders. The world’s trust and appreciation for our system has been generating a premium on our companies.

That premium is going to vanish the farther we go down Trump’s path.

It’s noteworthy that Trump is scaring off global travelers in droves, which you can see as a precursor to investors. Canadian bookings in February were down 40% year over year and are trending towards 75% reductions going forward. International visitors spend $230 billion per year in the United States and as shocking detention stories get wider circulation and travel advisories increase, we are likely to cut global travel to the United States by more than 50%. That’s a $115 billion subtraction from our economy. As people travel less to visit, they will also form a less favorable impression of our country and our products. If they feel that America no longer respects them, they are going to shop elsewhere. Canada, for example, bought $350 billion of our products in 2024 and that is rapidly declining in 2025 with the souring of relations and increase in consumer boycotts of US goods. Bad blood is bad for business.

While we have had a formidable economy, it’s still only 25% of the world’s and in virtually every product category, there are options to buy elsewhere.

Even if we ONLY saw most international investment in U.S. companies leave, we’d be in trouble. But smart domestic investors are also recognizing that the US stock market is slowly imploding under the weight of Trump’s tariffs and assaults on democracy. They will continue to move to safer havens.

That’s why I believe we’re looking at a major decline, reaching a total drop of in the range of 50% from peak, over the coming months.

My logic is this: We have around $60 trillion in the US stock market and 40% of that is held by foreign investors ($24 trillion). As we become an increasingly less trusted country, I think 80% of the foreign money leaves for safer markets ( $19.2 trillion). Of the remaining money, 30% is in tax advantaged retirement accounts like 401(k)s that mostly stays put because it’s harder to move out of US stocks (maybe 20% of that moves out of stocks, or $3.6 trillion) and of the 25% held by domestic investors in non tax-advantaged accounts, maybe 40% exits and the rest remains searching buying opportunities (another $6 trillion). Basically, if $29 trillion leaves our stock market, the prices for stocks as a whole will be cut in half. And that’s not even including the impact on our economy from boycotts on American goods that are growing each day.

Coming at this estimate from another direction, the bottom of the 2008 crash was 53% lower than the previous peak. We had an extremely unstable economic climate with issues metastizing from multiple directions, so that’s a reasonable indication of where the floor can be found in dire situations. I am betting the same logic will apply soon.

It’s worth noting the none of the above is about fundamental problems with the companies themselves. It’s about the evaporation of investment in our public companies when investors stop trusting America as it marches towards some version of authoritarianism in which the rule of law is no longer assured.

The mitigating factor in terms of speed is the intensity of loyalty to Trump in the MAGA base and their belief that he is going to make them wealthier, which FOX is now encouraging. For 30-45% of the US population, there is going to be a much slower recognition of what is happening as it will take time for them to release their expectations of coming abundance and their belief in Trump’s economic leadership.

Thus, what I think is likely is that April sees a 15-20% drop based on reduced corporate earnings for Q1, increased consumer anxiety, and expectations that we have already entered a recession because of a shrinking GDP. This month, I believe, is when global investors accelerate their movement towards the exits. Then, when the next wave of Trump’s moves show even more clearly his intent to move towards dictatorship, further declines will happen heading into the summer. Protests will escalate, which will likely catalyze crackdowns, creating scary news cycles that echo around the world.

We will be able to measure the full economic impact of this spiral by the Q2 results, delivered in mid-July. I expect to see an exceptionally poor quarter of results as the economic shocks hit more widely. That’s why I am intuiting a late July to August bottom.

Such a precipitous decline is not going to break up Trump base immediately. But by the time we have had two quarters of declining GDP and an official recession declared, some of his base will start rejecting his leadership in bigger numbers. Expect a tumultuous summer, including on the Republican side. Summer heat fuels anger and protests.

At the start of the year, the investment community mostly did not think Trump would implement a trade war through tariffs, no matter how much he promised that. The first stages of our current market decline were almost entirely due to Trump starting these tariff wars.

Now the investment community needs to have a fundamental recognition which is that Trump is not just misguided economically but actually aspires to be a dictator, which he has telegraphed in key ways. He’s making all the dictatorial moves by installing loyalists throughout government, dismantling independent oversight, and attacking power centers such as universities, law firms, judges, media, etc.. The more power he gets, the more he will wield that power aggressively beyond our borders as well, which will capsize the remaining goodwill in our allies. Already European is starting to see us as a potential enemy rather than their long-time NATO ally.

As it becomes clearer to ever more people that Trump is unequivocally an aspiring dictator and that it is going to be very hard to stop him, it is going to result in the collapse of the US economy as investors flee our companies.

Who wants to have their money stuck in an authoritarian country that turns into a global menace?

Since WWII, we have enjoyed the gratitude, good opinion, and trust of the world. That is changing and few are modeling what that will do to our economy and stock market. Investors need to price in the real risk of a collapse of the stock market in parallel with the collapse in the functioning of our democracy.

So that is all fairly grim but what is the opportunity?

If we see this in a clear-eyed, non-emotional way, we can attempt to time the cycle. We have as much information about what might happen and why (maybe more) as the investor ecosystem does. They don’t actually know how the entire market will respond to the collapsing of democratic functions. So they are largely crossing their fingers and hoping for the best and giving the same advice before, which is to hang on through downturns.

My stance is the opposite: if you think Trump aspires to be a dictator, it’s wise to get your retirement or investment money out of US. stocks for now and then, if you want to reinvest in the build back up, do so when the stocks are at the bottom, which I’m guessing is 50% from peak. If you time it well, you end up with twice the stock holdings as you currently have five years now.

Given that Trump’s most hard-core base of MAGA support is convinced he is an economic genius and that they just need to wait out the temporary storms, they are unlikely to head for any exits early. They are more likely to exit or have to sell at the bottom.

What this does, writ large, is act as a wealth transfer from MAGA citizens to non-MAGA citizens. While that is sad, it’s actually more beneficial long-term for our country as it will reduce some of the the power of the MAGA base to shape our political future as they recover from their dictatorial fevers. To truly move forward into a new dawn for America, we will need a humbled MAGA base that is coming to terms with the damage they wrought by backing Trump. The economic humbling is part of hitting a psychological bottom and releasing their illusions about Trump.

I shared an earlier version of this logic on my Facebook feed and it spread rapidly, with many people telling me privately they were exiting the U.S. stock market and knew other investors doing the same. That led The New York Times to interview me about my perspective and they concluded a longer article with the following quote from me, "Financial experts are ‘focused on things that are moving within the game as it’s played,’ he said. ‘But they’re not planning for if the board game itself is taken out from under.’

What we’re facing with the crumbling of American democracy is a major shift in the economic system that is not modeled by experts since they haven’t seen it before. While my logic may be rough and approximate, I think it’s directionally correct and that, if you aim to be of real help to others in the coming era, I think you should take it seriously and plan accordingly. Optimize your lifestyle with lower overhead, lower risk, investments in safer havens, and a plan for how to navigate real economic challenges. Keep more cash and play things safer.

Make your plans and then share what you do with those you love who are not MAGA supporters. It sounds harsh but I believe it’s going to be necessary for them to feel the full consequences of what is coming, which will help to break the Trump spell. It’s better for the economic pain of Trump’s policies to be born more heavily by those who championed them, which provides appropriate feedback for them in the future. Those who have weathered the economic storm in better shape can then focus on the healing and rebuilding in the aftermath.

It’s up to you, of course. I’m not an investment advisor. But I’m closely tracking what is unfolding and I am personally convinced that Trump is an aspiring dictator and that it’s going to take time to stop him. It’s going to be perilous and the world is waking up to that. During the time ahead we’re going to see further corrosion in the rule of law, which means the above scenario becomes more and more likely to play out.