Basis Trade Blowing Up: Could Usher In GFC 2.0 | Lance Roberts & Adam Taggart

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**Lance Roberts** (1:01)
What we are witnessing right now, don't go freak out and say, Lance said we're having financial crisis. That's not what I'm saying. What I am saying, though, is that if this gets out of control and if it is not contained, we have that risk of another type of credit-related event.

**Adam Taggart** (1:27)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart, welcoming you here back at the end of another week. Featuring my good friend, the Unsinkable portfolio manager, Lance Roberts. Lance, how you doing?

**Lance Roberts** (1:39)
I don't know about Unsinkable. I felt like Spencer in 1923, just struggling to try to get back home.

**Adam Taggart** (1:46)
Well, hey, you're still here. You're still here at the end of a very turbulent, volatile, rollicking, wavy week. So anyways, I think that constitutes Unsinkable in my book.

**Lance Roberts** (2:01)
So far, so good.

**Adam Taggart** (2:02)
So far, so good. Look, Lance, I mean, there's no sugarcoating it. It's a crazy time in the markets. I really empathize with your role here of, A, trying to just captain the assets that are in your custody and your stewardship through all that. But I know it's a very emotional time. I'm sure you're getting all sorts of calls from clients.
I'm sure just for you and the RIA team, your co-portfolio manager, Mike Leibowitz, it's probably just an emotionally taxing challenging time. So we're going to dig into all of it. But how are you guys doing?

**Lance Roberts** (2:36)
Well, no, that's actually kind of the surprising part of all this is that, normally when you kind of get to this volatile of environment, we get flooded with phone calls from clients just panicking because they don't, a lot of people don't really look at their portfolio, so to speak, they just watch what's happening on the headlines, right? Tariffs and the market's down, 6% of the day.
And obviously that media drives people to make emotionally kind of charge decisions, whatever it is. But you get fed that media headline and then that translates into kind of panic. Oh, I saw this on the news and what's going on with the portfolio, right? We haven't really had that much. And I thought we were, right? I thought we would have that a lot more. And I was talking to the advisors and we have advisor meetings three days a week. And so I'm always questioning them. It's like, okay, how are things going? How are the clients reacting? And they're like, they're good. The market's down 10%, 11% for the year. Our portfolios are down about three. So our goal is always that kind of 20% of the downside risk. We're right in that ballpark right now.
So from that standpoint, when they look at their portfolios, they're not seeing all this damage that's going on in the markets. And so they're like, okay, it's fine. You got it under control. It's doing all right. So far so good. We're gonna have a lot to talk about. We did a lot of trading this week because of the volatility and reposition portfolios. We did trigger a weekly sell signal. So we can talk a little bit about that this morning. We've got a brewing crisis that most people aren't aware of in the bond market. And that's so we sharply reduced the duration of our bond portfolio this week because of that crisis. So a lot of things, there's a lot of moving parts this week because of what's going on because of tariffs and mostly not even the tariffs as much as what's happening in the bond market, which is really a much bigger driver of what's happening in the market right now versus the headline news of tariffs.