Capitalizing on Chaos

**Dave** (0:02)
The trade war with China is intensifying. Both sides have ratcheted up tariffs to unheard of levels. You might have seen some of the viral TikTok videos from Chinese factories over the last few days. They are exposing the fact that much of our luxury branded stuff is made in China, from handbags to apparel to watches. And the videos are showing you how to directly buy from the factories, because even after paying the massive new tariffs, the factory direct price is still going to be a small fraction of what the major brands are selling the same thing for. Of course, they're selling similar products with the same materials and manufacturing, but without the brand labels. But some are starting to talk about a potential retaliatory measure that the Chinese government could hit us with, the idea of China legalizing counterfeiting. In recent years, China has actually been cracking down on counterfeit products coming out of the country. But could the trade war push them to take a drastic measure? Some counterfeits are identical to the real thing, made in the same factories by the same people. And if China were to stop policing that, it could destroy not only US brands, but the owners of intellectual property all around the world. So is it time to proactively protect our portfolios from Chinese knockoffs? Or is there a bigger story here? Today on Dumb Money, how investors might be the real winners of the trade war.
Hey there, Dave here, along with Chris and Jordan. We are Dumb Money. Welcome to Dumb Money Live. Quick reminder to smash the like button for the almighty YouTube algorithm. And I can tell you with 100% certainty that the like button is authentic. It is not a cheap Chinese knockoff, but just about everything else you'll interact with. Whilst smashing said like button was made in China from your phone to the cell tower, to their routers, to the server, all of it. So smash away, make market green again. Chris, Jordan, closer to home. We were talking about this before we went on. It's tax day. I hope you got your extensions filed and shipped off some money to the government guessing how much you think you might owe. I know I did and that whole system is crazy, where I literally don't have all the paperwork. I don't yet know how much I owe because, you know, the kind of companies we invest in are so unpredictable. So yeah, I shipped some money off to the government.

**Jordan** (2:13)
Yeah, I think same these days. If I ship some money off in January and I ship some more off today, I made a guesstimate. We'll see how good it is. I have no idea.

**Dave** (2:23)
And then it becomes like your job to try to shoehorn in everything to make your guesstimate accurate after the fact.

**Chris** (2:32)
It's the worst system. By the way, I think it impacted the market negatively this week. I think people forget how big of a tax gain year last year was for investors with capital gains.

**Jordan** (2:41)
People aren't selling today or yesterday. I mean, it takes a few days to settle everything, get the cash out.

**Chris** (2:49)
Jordan, you're missing the bigger point. And someone said that to me yesterday. I was like, it's not that I'm selling stock. It's that when you are faced with a massive wire going out of your brokerage account, you knew that last Thursday, last Friday, Monday, you're preparing to send that wire. That is psychologically impacting your trade decisions in a monstrously big way.

**Jordan** (3:13)
Oh, yeah, you've got less money now.

**Dave** (3:16)
It impacts all sorts of decisions. I'm planning a vacation for May, and I'm just now, like all of the hotels and stuff that I've already booked, they're hitting my credit card. I'm going, why am I living so extravagantly? This is ridiculous. I don't have this kind of money.

**Chris** (3:34)
Exactly. And I think it had a massive impact on the market over the last few days because I know I'm not the only one out there. When you know your face with pulling out, call it 5%, 10%, 15% of your portfolio to pay taxes, that is going to make you get a bit less aggressive in terms of your positioning in the market and more cautious, at least temporarily, while you're psychologically going through that. And it happens every year, but some years are way bigger than others. And this is a huge year for cap gains from 24 taxes, monstrously big, by the way, happening at the same time that we're seeing a massive market pullback.
That's not a good combination for your psyche, at least not mine.