Welcome back everyone. Today on the Joseph Carlson
Show, the Fair and Greed Index, which measures investors
sentiment, is at a 4A4 out of 100.
The extreme fair category starts at a 25 and we're at a four.
If we take a look at the S&P 500 over the past five days, this is
what it looks like. Basically everything is red now.
It's not just the color red, which is unique because we've
had red days before, but it's the numbers associated here -17%
with Apple -10% with Meta minus 8%, with Amazon, ServiceNow,
Intuit, Salesforce, Adobe, Uber, all down past 9%.
These are massive declines in some of the most important US
tech companies in the world, and they continue to go down.
They were going down until there was this big reversal because
there was news that Trump was considering a 90 day pause.
Just this glimmer of hope that President Trump was considering
a pause caused the stock market to go from -4% to plus 1% in a
matter of 20 minutes. But this hope was quickly
crushed as the administration said this was fake news.
Stocks are now continuing their steep decline with incredible
volatility whipsawing back from red to the green.
We have commentary now that buying now is not buying the
bottom. This is a suckers rally.
It's now gotten to the point that even some of the most
ardent vocal supporters of Trump like Stanley Drucken, Bill
Ackman, have come out to speak publicly against the tariffs,
saying they are a massive mistake, that they are not
balanced, that they're not reciprocal.
They are well in excess of what other countries are charging us.
Other business leaders like Jamie Dimon of JP Morgan warns
that the tariffs will raise prices and slow growth.
And while this is going on, we have Peter Navarro, who is the
senior trade counselor and advisor to Trump on the tariffs,
one of the biggest advocates of this policy, coming on to CNBC
in a long form interview to defend his policy.
And while all this is unfolding, we have individual investors
wanting to know what to do with their money.
Is it time to step back from the US markets or is it time to buy?
We're going to be going over all of this in this episode.
Now let's go ahead and start off by taking a step back and seeing
how we got into this mess. The reason that the markets are
falling so much in a 2 day period, down 10 to 15% for most
companies, the reason that US born investors and foreign
investors are both pulling their money out of U.S. markets is a
lost of trust in confidence in the US.
It's because many investors now don't trust that the US is the
place to put their money. And that lack of confidence is
because of how this policy is being rolled out.
For example, we can break down what we were promised.
President Trump ran on promising tariffs.
Most investors agreed that tariffs aren't inherently a bad
thing. In fact, we were promised that
the US is not always treated fair.
In many cases, Many other countries charge US tariffs, and
they have trade barriers in which the US does not.
We don't have tariffs against them and we don't have large
trade barriers. This creates a trade imbalance.
So President Trump's goal was to enact different measures to
create reciprocal or fair responses to those countries, to
incentivize them to come to the bargaining table and to strike
deals. We were promised that the US
would be eager to strike deals with other countries so long as
they lower their tariffs and trade barriers.
This was the basic pitch that most people had an understanding
of. the US would have moderate tariffs, reciprocal or fair
responses, and would be eager to strike deals.
But what we received in the rollout of this policy was
something entirely different. President Trump held up a board
with two different columns of numbers.
One of them was the tariffs charged to the US.
The other was the quote UN quote discounted reciprocal tariff
that in most cases was half of the number off to the left.
The only problem with this board and the formula to calculate the
tariffs charge to the US is these numbers were not only
wildly inaccurate, they were fabricated.
It's a completely made-up number.
President Trump described the tariff as reciprocal or equal to
half the rate of the tariff of the non trade barriers imposed
by other countries. However, they are nothing of the
sort. The tariff that the United
States is placing on other countries is equal to the US
trade deficit divided by US imports from a given country.
Or if we don't have a trade deficit, it's just 10%.
If we were to use the correct math to calculate the actual
tariff that other countries are charging us, they look entirely
different. For example, the tariff that
we're going to be applying to China's 34%, it would reduce it
to 10% if we were using correct reciprocal tariffs.
The tariff we're applying to Thailand is 36%.
It would be 10% if we were using the correct formula.
Based on the actual math, most of the tariffs would be in a
range of 10 to 13%. And originally when this was
announced that there would be reciprocal tariffs, the market
was expecting 10 to 13% tariffs. The market actually went up 1%
based on this news, and then it immediately dropped as soon as
President Trump started showing this different math.
Investing is a confidence game. In order to invest your money
into a company, you have to have confidence in the nation you're
investing it in. That they will have predictable,
sensible, and reliable policies when the math doesn't add up,
When these tariffs are based on numbers that don't make sense,
it doesn't build trust with investors.
So capital all across the world, including within the US, has
fled the US equity markets. The fear in the market today is
not based on an irrational fear of the future.
It's based on the lack of trust and predictability with the
White House's policy that these policies of enacting extreme
punitive tariffs on every country across the world will
make the United States a place to avoid doing business with a
hermit turtling into their shell, not wanting to do any
type of commerce or business with the rest of the world.
And even the most historically ardent supporters of President
Trump, business leaders, people that voted for him and publicly
supported him, are now coming to the realization that this policy
will damage America, will create trade barriers and formations of
other countries to circumvent doing business with America.
Bill Ackman is one of the latest business leaders to join the
pact of them that are growing in opposition of these tariffs.
Bill Ackman called for a 90 day pause in the tariffs to
negotiate with other countries, warning that the alternative was
a, quote, self induced economic nuclear winter.
He says we're in the process of destroying confidence in our
country as a trading partner, as a place to do business and as
the market to invest capital. Despite pushback from a growing
number of Republicans and Trump supporters and business leaders,
he still continues to hold strong with this tariff plan.
At least of now he's pushing back saying, I don't know what's
going to happen to the markets. I can't tell you I don't want
anything to go down, but sometimes you have to take
medicine to fix something. Trump still views this as short
term suffering for long term gain.
But now there is a growing chorus from big names on Wall
Street and politics, including those who back the tariffs in
theory, that the current plan is misguided and will cause
irreparable damage. Even Elon Musk has been
critical, calling for free trade agreements between the US and
Europe while criticizing Navarro, slamming his ego and
brains. We have people like Elon Musk,
Ted Cruz, news, Bill Ackman, various supporters from
political leaders to business leaders who have supported Trump
up until now pushing on the brakes saying that this tariff
plan is not rolled out well and will damage the United States.
But the Trump administration so far hasn't changed course.
Led by the White House senior trade counselor Peter Navarro,
they continue to defend their tariff plan.
The first thing that he does in this interview is defend the
methodology of calculating other countries tariffs and our
reciprocal tariffs. I mean, first of all, the
methodology was perfectly sound. It was done by the Council of
Economic Advisers based on long term studies that are in the
academic literature. And the people taking potshots
at us are the same people that always take potshots.
American Enterprise Institute, Peter.
Of course, of course, the Joe come on, the American Enterprise
Institute has been against. Conservatives.
Larry Lindsey. Let's not get buried down in
those weeds. Now you asked me a serious
question. He mentions that the people
taking potshots at the methodology of calculating these
tariffs have always taken potshots at the president, and
that is an inaccurate portrayal of what's going on.
Many of the critics of this tariff plan are people that are
new critics of the president, people that have previously
supported almost everything the president has done up until now.
Blackman is a great example. He has overwhelmingly supported
a President Trump up until now. This isn't taking potshots.
This is real criticism of a deeply flawed methodology.
Whoever came up with this methodology and the calculations
for these reciprocal tariffs should be fired.
They came up with a calculation of other countries tariffs that
doesn't make mathematical sense and therefore our reciprocal
tariff for applying is erroneous.
And when you apply nonsense mathematical formulas to global
trade policy, it creates a lot of insecurity in the markets.
The reason that the market is so concerned about what's going on
is because of how unclear this policy is.
But the way that Peter Navarro's framing this is as though the
critics are just the same old critics of the president the
entire time, the globalists that don't like President Trump.
And that couldn't be further from the truth.
One of the critics of this plan is Elon Musk, who helped Trump
get elected. Elon Musk is not someone that
takes potshots at the president. Now he goes on continuing to
defend this formula, emphasizing that it's not not the tariff
other countries are charging, not just their straightforward
tariff that really matters. It's the non tariff trade
barriers. And he gives an example.
But let's understand what the problem is when you have a
country like Vietnam. Let's take Vietnam when they
come to us and say we'll go to 0 tariffs.
That means nothing to us because it's the non tariff cheating
that matters. Let's do Vietnam, Joe.
They sell us $15.00 for every $1.00 we sell them about $5.00
of that 15 is China trans shipping to Vietnam to evade
their tariffs. What is what is Vietnam?
What is Vietnam? Do they dump into our markets
killing our shrimpers, our people who make metal brackets,
kitchen cabinets, agricultural products, they engage in the
intellectual property theft. They have the biggest number of
cases aside from China at the Department of Commerce on the
dumping. So the point is, the point is
anybody who wants to come to talk to us, talk to us about
lowering your non tariff barriers.
Vietnam has a 10% vet, Europe has a 19% vet.
We can't compete against that. We have tried help us on Trade
Organization to get Andrew. Let me just make this point.
We have tried at the World Trade Organization since the 1970s to
get VAT tax relief and they've told us no every single time.
We've won case after case at the World Trade Organization on
things like our agricultural products, pork, beef and other
and. Corn he brings up a valid point
that these non trade barriers are an effort of other countries
to make it very difficult to do business in their country
without a specific tariff. And that's the problem with this
policy overall. There's so much grey area.
There's so many different things specific to every country.
That's why many people are suggesting a 90 day delay to the
tariffs, but it doesn't seem like that's going to happen
right now. Peter Navarro saying that these
countries going to 0% tariff is just simply not enough.
So what is it that these countries have to do?
He tries to lay it out. Here.
So what is enough? OK, you take any given country,
they're like fingerprints. They all cheat us in a different
way. So here are the things they
cheat us on. Some of them engage in currency
manipulation. Some of them have a hefty VAT
tax. All of them dump into our
markets. All of them engage in heavy
export subsidies and government subsidies.
All of them put up these phony technical and phytosanitary
barriers to our AG products and our autos and everything in
between. Many of them steal our
intellectual property. A lot of them runs sweatshop
labor, including forced child labor.
They have pollution havens. So when you say to me, aunt,
what do we want from them? We want fairness.
We don't want them to kill American workers by inundatis
with this non tariff cheating. And it would be really
refreshing to have the media talk more about that this zero
tariff thing. It's a it's, it's a
misdirection. No, it's a misdirection.
It's the non tariff where. All these problems are real and
the challenges are real, but the question is whether or not this
can be accomplished in a short timeline.
These tariffs again go into effect very soon and it seems
like these problems are so big, so vast, so wide and somewhat
subjective that this level of unclarity of what these
countries specifically need to do and what timeline they have
to do it is causing people to lose confidence overall.
The market can get behind real reciprocal tariffs that are in
line with the tariffs. Other countries are charging us
a smart methodical rollout of policy.
But the market's lack of confidence is a reflection of
this haphazard and confusing policy rollout.
Unclarity and unpredictability continue to over shadow any
effort of this tariff policy. It's creating doubt and business
leaders, investors in the capital markets.
And this has been the problem since the announcement of these
tariffs. Investors don't know what to
expect. Business leaders don't know what
to expect. They don't even know the
intended goal of these tariffs, the long term plan right now,
capital allocators, CEOs, investors, business leaders,
they're all working blind. And perhaps nobody has pointed
this out better than Derek Thompson.
What bothers me most, honestly, is not that I don't know which
side is which. It's that I don't think the
folks who are in charge know what they're doing or why.
If you look at the justifications for this policy,
they're all over the place. You've got Peter Navarro saying
the tariffs are going to raise $600 billion a year.
That suggests they're going to remain in place.
You've got the tech folks who are associated with the Trump
White House saying that actually this is just an opening
negotiation tactic to force other countries to bring down
their tariffs, and then we'll bring down ours.
Well, wait, pause. You cannot raise taxes with a
tariff is designed to go away. So already you have parts 1 and
2 not making any sense. Then you have this third
strategy, that sort of Stephen Marens idea that what we need to
do is de dollarization. Well, you just showed about 30
seconds ago that the dollar is actually appreciating right now
because the entire global economy is puking.
I don't think the folks in charge know what they're doing
or why. And the reason that scares me on
top of all of the obvious is that there's this theory that
Donald Trump is this mastermind of uncertainty.
And there's there's some reason to this, that if you have
someone who is so great about uncertainty, they can get other
countries to do what we want them to do.
But the problem is that uncertainty is a double edged
sword. Domestic businesses need
certainty to know how to invest. Domestic manufacturers need
certainty to understand how to expand.
If there's uncertainty in terms of our trade and tax and
spending policy, how is a manufacturing company supposed
to figure out how it's supposed to finance a doubling of their
factory base? They cannot do it.
What we need now is absolute, clear certainty.
It might be good in some very specific unique deals to have a
level of uncertainty, to be unpredictable, but in terms of a
global economy and preparations of large CapEx investments,
businesses preparing for tax policy, certainty is a good
thing. Certainty and predictability is
a very positive thing. It allows businesses and
investors to plan for the future with confidence.
And right now they're losing that confidence.
Now, not everyone is negative on the tariffs.
There are still ardent Trump supporters that view this is a
positive development, Kyle Bass being one of them.
He went on to CNBC to share his view that he thinks this
strategy will ultimately work. I think the tariffs are
thoughtful. I think they will work.
I think you've already seen Vietnam ask for a 90 day
reprieve to negotiate. You're going to see a lot of
first cash, plane tickets, delegations from all around the
world coming to meet with the president to try to hammer this.
Out he's on the side where he believes this is a negotiating
tactic that will lead to more fair and balanced deals between
the US and other countries. This back and forth debate
continues between the few people that are supporting the rollout
and implementation of this policy and the growing chorus of
people that are now coming again.
And here again, we have Derek Thompson listening to that past
interviewee Kyle Bass and responding to it.
Be totally honest, Kelly, I've been listening the last 10
minutes of this show. I cannot believe what I'm
listening to. I, I heard your last guest say
if the economy shrinks, that's good.
If the stock market goes down, that's good.
If the housing market crashes, that's good.
If there's a trade war, that's good.
When did the capital class get taken over by degrowther
protectionists seeking 19th century autarky?
OK, But Derek, let me just jump in for a second, because if
there's one refrain we've heard from millennials over the past
several years, it's that the dream is gone.
They can't afford a house. Groceries are too expensive.
It's. Only the first chapter of.
Abundance. Apparently the 1st chapter of
your book. So aren't you a little surprised
to hear the globalists, the pro stock market types who are
supposed to be at fault for all of this, now reading out of your
book and saying we're bringing prices back down?
They're, no, they're, they're crashing the economy.
That's very, very different than making housing affordable.
If you want affordable housing, you need a job.
If you crash the economy, you're going to have unemployment.
And whenever unemployment hits an economy, as we just saw in
2008 and we saw before in the 1990s, who loses their jobs
first? It's last one in, first one out.
It's young people. So if your job or if your plan
is to crash the economy in the short term for the purpose of
helping young people afford a house, you have got it totally
backward. Young people need jobs, they
need money, and then they need a plan to make housing affordable,
right? Donald Trump could have come
into office and said what I want to do is to make the
construction of housing affordable, and that means the
inputs to housing. Instead, he slaps a 25% tariff
on Canada, which we import our lumber from, and a 25% tariff on
Mexico that we get drywall gypsum from, thus immediately
raising two of the most important inputs for housing by
25%. This is the strategy to make
housing less affordable at the same time that you make it
harder for young people to keep a job because the stock market's
puking. This is not the way to go about
abundance. This is scarcity meeting
scarcity. This is Trump saying we we don't
have enough housing, So, you know, we need fewer immigrants
or we don't have enough manufacturing in the US, so we
need less trade. Abundance is a positive, some
way of looking at the economy. It says we can grow if we invest
in housing. We can have a strategy that
seeks to make more of what we need in the US without trying to
cut ourselves off from the entire global economy.
I completely reject the idea that what Trump is pursuing is
anything like abundance. Derek is correct that the path
the US seems to be pursuing is 1 of scarcity, one of cutting
ourselves off with the rest of the world, wanting to live in
our own little shell and do everything within the United
States. Not wanting to do any type of
trade with any other country because in each case what
they're doing is unfair. This is not a policy of
abundance and confidence and growth and growing the pie,
making America a place of business and to invest.
It's the opposite. And the reason that stocks are
trading down so much is because investors are assessing the
situation, looking at the potential future cash flow
impacts, and realizing that they're going to go down.
These companies will earn less money as a result of these
policies, and there's broader implications of risk and
uncertainty that can happen if these policies continue in the
long term. For example, many of the best
companies in the United States have an enormous amount of their
revenue outside of the United States.
Microsoft has around 50% of their total revenue outside of
the US. Other great U.S. companies like
Amazon, Netflix, Google, Meta, you name it, have an enormous
amount of their revenue in their business from without the United
States. They're overseas.
They do business in Europe, they do business in Asia, for
example. Example, if we look specifically
at Netflix and the revenue broken down by region, you can
see that over 50% of the revenue from Netflix is outside of the
United States and Canada. This orange bar hair on the
bottom represents the United States, grouped in with Canada.
Then we have this lighter orange bar, which is Europe, the Middle
East and Africa. We have Latin America here, and
we have Asia Pacific. All of these countries are
enjoying US products. They're buying US services.
And even though there's no direct importing and exporting,
these companies will become reciprocal targets to this trade
policy. We've already seen many other
leaders from different countries threaten to retaliate with
strong restrictions on U.S. companies and even blocking them
from their markets, and there's a high chance of future
escalation. So right now, we have a
situation of increasingly greater risk every hour that
these policies remain in place. And unless there's a quick off
ramp offering relief for a greater path of clarity or time
to negotiate, stocks will continue to fall and be
discounted further and further. And during time periods like
this, I continue to buy. I'm buying companies at a faster
pace than I have in years. In fact, I continue to transfer
new money out of savings to aggressively buy this dip.
This morning, I bought $3000 of Equifax stock, and I have
another order of $7000 going into Equifax.
That is $10,000 of that stock just today.
And simultaneously, while I'm buying Equifax, I'm increasing
my stake in Google, buying another $3000 of this stock in
the story fund. I don't have any buys going
through today, but I'll continue to buy these companies
throughout the week. In fact, in just the past five
days, I've bought over $20,000 of Amazon.
That is the most aggressive pace I've bought that company since
the lows of 2022. Overall, I'm digging deep to try
to buy this dip as aggressively as I can, even though I know the
dangers and uncertainties in this market and I'll explain
why. Let's go ahead and go through
some of the facts about buying the dip.
This whole idea that as investors, as good investors,
we're going to strike when opportunity arises, when stocks
are super cheap, when other investors are fearful we're
going to jump in. Well, that's great in theory,
but that whole idea of buying the dip is much easier said than
done for a couple of reasons. First of all, buying small dips
is easy. Buying huge dips is hard.
This is something that I've observed as an investor for a
long period of time is that investors are always eager to
buy small dips. The market drops 3% or 4%.
That's all fun and games you buy in, you get a little dip on a
company that's easy to do because there's no real risk
there. There's no real uncertainty.
You're just buying when price is fluctuating due to natural
volatility of trading. The real challenge comes into
play when you're buying huge dips.
Buying huge dips is a lot more mentally challenging, mentally
tasking. It requires a lot more resolve
when stocks go down 10% or 15% to want to buy.
And part of the reason it's harder to buy huge dips that
keep dipping is because buying the dip always runs the risk of
stocks dropping further after you buy.
And that's psychologically difficult to deal with.
What if you buy today and stocks are down another 5% tomorrow
because of the same tariff news? Would you have been wrong to buy
today? Well, that remains to be seen.
But either way, the psychology of this makes it difficult.
It's difficult, in fact near impossible, to time the bottom.
It is impossible to reliably time the bottom.
Nobody has ever proven over any length of time that they can
reliably time the bottom in the market.
It is unknowable. Investors will claim that this
is the bottom or that is the bottom.
Those are guesses. Investors focus their attention
on trying to time the bottom rather than investing in quality
companies when they're intrinsically undervalued, when
the opportunity today, right now in front of them offers them an
assortment of great quality companies at reduced prices.
But instead, they look at the risks, the risk of the stock
market going further in the red after they buy.
How disappointing would that be? The risk of them not being able
to accurately time the bottom. Now, another thing that scares
people out of the market during times like this is people say,
you know, the, the great financial crisis was one thing.
The.com bubble is another. We also had COVID, but this time
it's different. This time we don't have the Fed
stepping in to help. We don't have stimulus.
We have a a leader that has this policy and he's not listening to
anyone. This time it's different.
And while that's true, it is different this time and there's
unique risks this time that didn't exist the last time or
the time before. It's also true that literally
every time it's different. Every dip is different.
Stocks don't fall unless it's different.
If we face the same challenge that we faced 1000 times,
investors will know the outcome and stocks will not become
discounted. The inherent nature of
unpredictability, unknowable futures, is what causes equity
price declines. That's what causes stocks to get
discounted. This is called the risk premium,
the price that you have to pay to get the alpha in the market.
You're not going to get a premium in the market.
You're not going to get alpha over other investors by avoiding
investing during any times of uncertainty.
This is also the case where big dips almost always coincide with
times of great uncertainty. This relationship of big dips
being tied to great uncertainty almost always happen.
There's never really time periods where investors
willingly sell out of companies that have very predictable,
forecastable futures. It always happens during a time
where investor confidence is challenged, where investor
emotion takes over. And in many cases, it gets to a
boiling point where investors discount stocks to too great of
an extent, where the dip is mismatched with the level of
uncertainty. Just like the market can become
overconfident, believing that the future is completely
predictable, there is no risks and you can pay almost anything
for stocks like we had in 2021. You can also get to the other
end of the spectrum where stocks are so heavily discounted, where
the uncertainty is so heavily factored in that stocks are
trading for too cheap. One of the things that
frequently happens with big dips in the market, especially
challenging times of uncertainty, is it can cause
investors to give up on their investing strategy.
Investors have a strategy, they're sticking to it.
Once that strategy comes under real pressure with equity prices
going down, they start to divert and change their strategy.
For example, a common one is they'll give up on individual
stocks and move to ETFs. This is something that I see
almost every time we go through any challenging environment.
Investors have been previously investing in individual stocks,
picking out what they believe are the best investments.
As soon as those individual stocks start to go down, they
throw in the towel and go to ETFs.
While that's not bad per SE to invest in ETFs, in many cases
investors move from high beta individual stocks to low beta
ETFs, therefore lowering their exposure to the market and to
volatility during the time period where they should be
increasing it. So in many cases, this swap is a
negative move for investors. If they were bullish on
companies just two months ago, they should re evaluate the case
on an individual basis and see if there's any reason to be less
bullish on that individual company compared to other
options available. When buying the dip, you're
never going to have a situation where you'll have total clarity
of what will happen. Investing in general requires a
little faith that things will work out better in the future
like they usually do. This is why good investors are
naturally somewhat optimistic about the future.
You can hear Warren Buffett over and over again saying
notwithstanding the many challenges that the US has faced
over decades of time, his entire life, he remains bullish on the
US. He says we have this special
ingredients, we can figure it out.
We challenge people that make wrong decisions.
We pressure people into change. If leadership doesn't work out,
leadership changes. The tariff issue is a policy
decision without congressional approval, and it can be changed
just as rapidly as it's implemented.
There's of course the option that it faces the long term
reputation damage with trading partners and long term economic
damage, but there's also the option that it's quickly walked
back into a more reasonable range.
As investors, we don't know what the outcome is and that is the
unclarity in the market today. But if things move in a positive
direction at all, if there is any semblance of hope or future
clarity in this market, these same equities that are being
discounted today will bounce quickly.
The dip will suddenly turn into a massive bounce where investors
clamor back into equities. Right now, investors are faced
with this tough decision of whether or not they should
continue to buy these companies during a time where they don't
have total clarity. But in general, over my
investing history, I've noticed that the time to buy is probably
when it feels the most difficult to buy.
The time to buy is when discounting has taken place,
when investors are in extreme fare and panic pricing in the
most bleak of futures. The time to buy is when equity
prices are low and other investors are afraid.
Now I want to reverse time and go back to a time period where
we had a very significant dip. This was during one of the worst
times in the world's history. We lived through a literal
pandemic. We actually did.
If you actually look back, it was crazy what went on
requirements that we wear masks everywhere we go.
People clamoring to Costco taking as much toilet paper and
water as they can to the point where they say you have to have
a limit of one per household and people guarding them.
This was a crazy time period where shipping and logistic
networks were completely dysfunctional.
Every business shut down. And at the very bottom of this,
I'll highlight it in red, that was the exact bottom of the
market. The very bottom day of the COVID
sell off, which was one of the lowest points of the whole past
decade to buy equities. Stocks were selling at extremely
low prices, discounted for the most extreme disastrous
scenarios possible. The day was March 23rd of 2020.
Let's take a look at an old CNBC interview that happened on that
exact day, March 23rd of 2020. This is the exact bottom of the
Covic dip. This is Mohammed El Aaron, a
chief economic adviser, someone that seems wholly qualified.
But listen to the tone, to the theme of what was being shared
that day. Again, the exact bottom of the
dip. People are suffering.
There is real pain in the street.
This is an economic sudden stop that takes away your livelihood,
that makes you feel insecure, that takes away goods from
shelves. I mean, this is a real, real hit
and people are looking to Washington to to do something.
But understand this is also a really tough policy design.
The best you can do right now is protect and contain the damage.
You can't erase it overnight. That's a health issue, not an
economic and Financial Policy issue.
You've got to do that, but designing it strictly.
And I think we're going to see much bigger emphasis on people
than companies compared to 2008. And that distinction is going to
have implications for different segments of the markets.
The theme is that things are bad, really, really bad.
People are suffering, the future's bleak.
We don't know how the White House is going to address
anything, and it sounds like they're going to favor people
over companies. He goes on to address investors
specifically and directly. Here's what he has to say to
them. But this I'm still for most
investors out there, I'm still telling, you know, be cautious
because that we are in completely uncharted what is
here. Be cautious, we're in uncharted
territory. I want to show you with my
brokerage what I did during this same time period.
In fact, what I did that exact same day, March 23rd of 2020,
the exact bottom of the market. During that day, I not only made
one, but I made two deposits into My Portfolio, 1 of $500 and
another of $2000. This is to buy companies, to buy
ones like Apple, to buy ones like Microsoft, these companies
that were incredibly discounted. Now, I didn't know when the
bottom was, and you can see that evident in my trading history.
I didn't just buy on the exact bottom, but I bought a little
bit too early and a little too late.
If I had known that the bottom was March 23rd, you would see
all my deposits happen on that exact day.
That's when I would have bought everything.
But of course, we don't operate with that knowledge in advance.
What I was doing during this time period was investing
aggressively. I was digging into my savings.
I was buying companies at extreme discounts.
Now I want to be clear on something.
I'm not suggesting that today is exactly like March of 2020.
There are so many differences and I don't know if it will work
out the exact same way either. I don't know the timeline of the
recovery. I don't know what deals are
going to be negotiated. I don't have any type of
foresight and exactly how things will turn out more than anyone
else. But what I do know is consistent
throughout time, buying extremely high quality companies
that are deeply embedded with incredibly wide moats and
profitable business models with great balance sheets during
times of despair and uncertainty typically works out really well
for investors. I know that these companies are
going to be around for the next 10 or 20 years, irregardless of
what type of restrictive or punitive policies governments
enforce. These companies are used to
going through restrictive policies.
Half the time these companies are under lawsuit by the
government, under threat, under taxation.
They're under punitive measures all the time.
These companies outlast and outstand administrations and
government officials, and they only go on dramatic sales during
time of dramatic uncertainty. Most of these companies have
traded down 10 or 15% in just the past three days alone.
So I'm going to be buying this dip aggressively, knowing that I
don't know the future. I don't know how things are
going to turn out. I don't know when this dip will
turn into a bounce, but I'll be buying anyway.
That's going to be it for this episode.
Hope you enjoyed. See you in the next one, yeah?