Biblical principles of investing during rapid change

Dear Chuck,

I am a recent widow. I have been advised to move my investments out of foreign stocks due to possible economic turmoil under our new administration. My advisor is not a Christian; what biblical principles can guide me?

Worried Investor

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Dear Worried Investor,

That is very interesting advice from your investment advisor and seems to me like a bit of a knee-jerk reaction. Possibly, he is reacting to the rhetoric about tariffs or promises of “the golden age of America” coming from President Trump. The world is a very big place, and there are many great companies outside of the United States that may or may not perform very well in the long run. It concerns me that he is advising you to make changes with blanket statements apparently based on more of a hunch than a careful analysis of each company or asset in your portfolio.

I have written in the past that the United States stock market tends to perform about the same under a Democratic or Republican President, so it is always best to be measured and steady.

I do not give investment advice, and certainly, your advisor may turn out to be correct. However, you requested that I point you to the biblical principles that can guide you as you interact with your professional advisor. Here is a framework that will help you make a better decision.

Biblical investment principles

First, invest only in those things which you understand. Proverbs 27:23 (NIV) says, “Be sure you know the condition of your flocks, give careful attention to your herds.” Imagine having your investments in sheep and depending on someone to make all the decisions for you. It is far better to know for yourself what is going on with your sheep. In fact, we are instructed to “pay careful attention” to any investment that we have made.

Recommendation: Ask your advisor for an analysis of the stocks, funds, or individual companies that may be impacted by this decision before you agree with his recommendation. Look at each one in detail if possible and determine if some or all should be terminated.

Second, diversification is safer than concentration. Solomon advised in Ecclesiastes 11:2 (NIV): “Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” If you do the math, we are instructed to limit our investments to no more than 12–15% in any single asset class. I am often asked by nervous, security-conscious investors if they should “put everything into gold” — not according to the Bible. Diversification is suggested based on the reality that no man knows the future. We can use our minds, do an analysis, and avoid making foolish mistakes, which is what I am suggesting in this case.

Recommendation: Determine the percentage of your total investment funds that are currently in “foreign stocks.” If it is small and the companies are excellent, you may want to leave it there. If you are “overweighted,” meaning you have too large of a percentage in foreign stocks, you should make appropriate adjustments.

Third, never get in a hurry. Proverbs 21:5 (TLB) says, “Steady plodding brings prosperity; hasty speculation brings poverty.” Trying to guess where the market is going is a recipe for disaster.  Warren Buffett was once asked if he looked at the stock market changes every day. He famously replied that if anyone needs to look at the market price of their stock every day, they should not be investing. His point is that it takes time for an investment to grow.

Recommendation: Think of your investments like planting a tree versus buying a ticket on a racehorse. If you are elderly, that will have an impact on how long you keep the tree planted versus harvesting the fruit.

Finally, get multiple advisors. Proverbs 15:22 (ESV) says, “Without counsel plans fail, but with many advisers they succeed.” You are taking a great step by asking for other opinions. Please consider me one of many advisors you may ask about this decision.  

Recommendation: Gather the information that I have suggested above and meet with two or three trusted friends who have nothing to gain from advising you. Ask if they agree with the recommendation based on the data that you present. This will give you peace of mind and likely a far better result.

Expert Perspectives

Doing your own research will help you have a better perspective. Here are some sources from experts, along with their economic outlook and expectations:

Blue Trust
“While we fully expect Trump to enact tariffs and continue using tough rhetoric, the results may not be as dramatic as some may think … We enter 2025 with a reminder: Successful investing requires a long-term perspective and balanced philosophy centered on reaching your goals.”

Kiplinger Report
“An effective goals-based investment approach assumes unexpected twists and turns in the market are inevitable and can provide investors with the ability and confidence they need to ride out volatility,” says Glenmede’s Chief of Investment Strategy and Research, Jason Pride, and VP of Investment Strategy, Mike Reynolds.

Forbes
Many professionals see the first six months of 2025 as a time of ups and downs. Investors should seek to create a portfolio that is “market-neutral” so that it performs well regardless of how the market moves day to day.

Equities
Some analysts claim that President Trump’s proposals to cut taxes, enact tariffs, and reduce regulations should create a market euphoria. Others believe that a major correction is coming, and that extreme volatility could spur a crash. Keep a healthy amount of cash on the side and invest it when certain sectors are temporarily down. 

CNN.com
Tariff proposals are fueling volatility and uncertainty for investors. Some sectors may benefit, but the overall economic impact is unpredictable.

To reduce your worry

Renew your mind on God’s Word. Keep an eternal perspective regardless of what happens with your investments, the US economy, or President Trump’s next term in office. Our God knows your needs, and He will take care of you.

“Some trust in chariots and some in horses, but we trust in the name of the Lord our God” (Psalm 20:7 ESV).

“Thus says the Lord, ‘Let not the wise man boast in his wisdom, let not the mighty man boast in his might, let not the rich man boast in his riches, but let him who boasts boast in this, that he understands and knows me, that I am the Lord who practices steadfast love, justice, and righteousness in the earth. For in these things I delight, declares the Lord’” (Jeremiah 9:23–24 ESV).

“Trust in the Lord with all your heart, and do not lean on your own understanding. In all your ways acknowledge him, and he will make straight your paths” (Proverbs 3:5–6 ESV).

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