The Era of Hands-Off Investing Is Over for Many Americans

For many years, Yoram Ariely refrained from touching most of his investments, choosing instead to navigate the fluctuations of the stock market. However, last Tuesday, he reached his limit.

The 82-year-old sold off nearly half of his stock holdings due to concerns over President Trump’s economic policies, particularly the impact of tariffs. There might be further reductions in his portfolio as well.

"The choices are shifting every day," stated Ariely, a former business proprietor from Longboat Key, Florida.

The disorganized combination of tariffs and federal spending reductions under the Trump administration has alarmed numerous ordinary investors, causing them to doubt the strategy of passively buying and holding onto stocks.

The S&P 500, known for providing difficult-to-match returns, slipped into correction territory this past week as Wall Street expressed concern about the state of the economy. sliding toward recession .

During the initial two weeks of March, retail investors have been trading in their 401(k)s At over four times the typical amount, as recorded by Alight Solutions. This past month saw the highest volume of trades in nearly half a decade.

Investors who have sold off their American equities mention they are seeking stability in cash management vehicles, short-duration debts, precious metals, and overseas exchanges. European defense stocks has been a favored choice, based on heightened security expenditures in the area.

According to survey data from the American Association of Individual Investors, the percentage of investors with an optimistic outlook on the stock market has dropped to its lowest point since September 2022.

Certainly, numerous individuals are refraining from interacting with their investment accounts, adhering to conventional monetary guidance aimed at preventing hasty choices amid market volatility. Despite increased trading activities within 401(k) plans over the last month, these transactions only accounted for about 0.43% of total account balances. This figure contrasts with an average rate of around 0.12% seen across recent years, as reported by Alight.

Individuals' views on the economy are strongly connected to their political affiliations. Certain backers of Trump claim they remain unperturbed or are even anticipating an opportunity to make a purchase.

Nevertheless, this represents a sudden change, as it had become commonplace over recent years to believe that the stock market would continue rising steadily due to a robust economy. From October 2022, when the S&P 500 reached its lowest point during the previous bear market, until reaching its most recent peak in February, the index climbed by 72%.

Since then, the S&P 500 has fallen by 8.2%, which includes a decline of 2.3% just last week. However, the benchmark index recovered somewhat on Friday, rising by 2.1%, as investors were reassured about certain developments. averted government shutdown , yet concerned about a report that consumer sentiment is sinking .

Patton Price stated that he anticipated significant geopolitical turmoil during Trump's second term, even as stock markets continued to soar at the time. Consequently, he liquidated all the holdings within his retirement accounts close to Inauguration Day, which was January 20.

“It’s not like I have some fancy thesis and I think I know what’s going to happen,” said Price, a 46-year-old musician and former political consultant in Richmond, Calif. “I just don’t think anybody knows what’s going to happen.”

Price, who supported Kamala Harris, has largely parked his earnings in money-market funds or short-term bonds. He remains uncertain about when he should reinvest those funds into the stock market.

TIAA, a financial services company, reported an approximate 10% increase in customer calls to advisors over the last two weeks, including a higher-than-normal amount from individuals who typically handled their investment portfolios independently.

Over the seven days leading up to March 5, individual investors poured an additional $30.4 billion into money-market funds, marking the highest weekly inflow in more than twelve months, as reported by the Investment Company Institute.

In February, U.S. physical gold exchange-traded funds experienced net inflows exceeding $5 billion, as reported byMorningstar. This trend has continued into March, with investors adding an additional $1 billion up until Tuesday. The cost of the valuable mineral has also been fluctuating. surpassed $3,000 per troy ounce For the first time this past week.

Other parties have explored international options. Last month, investors invested $1.8 billion into European equity ETFs registered in the U.S., as per data provided by the London Stock Exchange Group.

Jasmine Singh reached her limit when Trump harshly criticized Ukrainian President Volodymyr Zelensky during a tense White House gathering on Friday, February 28. By early Monday morning, Singh had switched from managing an American-focused asset distribution to overseeing a portfolio predominantly composed of European equities.

The initial month of President Donald Trump’s second term led the 57-year-old ex-investment banker to believe that the U.S. is stepping back from its pivotal role in the worldwide economic landscape and geopolitical equilibrium.

I'm unsure which world we're navigating now," stated Singh, a resident of Millburn, N.J. "It’s unclear to me how much of my previous studies will be relevant in today's market.

International markets have outpaced In early 2025, the U.S. stock market was facing challenges as indicated by performance metrics. Meanwhile, the Stoxx Europe 600 index saw an increase of 7.7% since January, whereas the German DAX surged over 15%. In stark contrast, the S&P 500 experienced a decline of 4.1%.

While some view indications of turmoil in the U.S. markets, others remain unconcerned.

Francisco Ayala, a financial advisor based in Phoenix, mentioned that a client who cannot tolerate Trump lately asked for advice regarding moving their investments outside the U.S. In contrast, another client who greatly admires Trump views the current economic downturn as a necessary recalibration.

Earlier this month, Ben Pfeiffer began purchasing shares of Toast, Robinhood, Reddit, and Broadcom.

"When all of this began happening and the markets declined, it became somewhat more thrilling as it presented chances to acquire shares that I find appealing," explained Pfeiffer, a 43-year-old resident of New Braunfels, Texas, who operates an SEO marketing firm.

He cast his vote for Trump and observes that the liberal individuals he knows seem more pessimistic these days.

"I think they might be more prone to making rather illogical choices," Pfeiffer stated.

Send your message to Joe Pinsker. joe.pinsker@wsj.com and Owen Tucker-Smith at Owen.Tucker-Smith@wsj.com