Extreme Valuations + Rising Volatility = 'Wild Ride' Ahead For Markets | Jonathan Wellum

**Jonathan Wellum** (0:00)
I think it's going to be a lot of volatility in the market. I don't think you have to be a genius to see that. There's just a lot of stresses. Valuations are high, tensions are high. We've got a lot of countries in the world are not growing at all. Other countries are really feeling the pressure of increasing energy costs. So you've got depreciating currencies in many of these countries. So this is just a lot of things moving around. And now you've got the SpaceX, you've got Google raising capital, you've got pressure on the interest rates and on the debt markets. All of this stuff is hitting at one time. And I think investors need to be prepared to do volatility, know what you own, own quality and sit tight as long as you own good businesses and you have a good asset allocation, that it's going to be I think a wild ride.

**Adam Taggart** (0:51)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart, here, welcoming you to a special discussion here with our good friend from Canada, Jonathan Wellum, who is the founder of Rocklink Investment Partners up there. And again, they're one of the financial advisory firms endorsed officially by Thoughtful Money. Jonathan, how are you?

**Jonathan Wellum** (1:12)
I'm doing very well and looking forward to a nice, warm, sunny summer, hopefully after a cold, long winter up here in Canada.

**Adam Taggart** (1:20)
All right. Yes. We're getting close to the start of summer, and I'm sure up there in Canada, you guys are cheering for that. Well, look, Jonathan, this is a pretty simple theme for today's video here. Markets kind of got walloped on Friday. Set up a little bit of a two by four to the head, because up until then, everything had been roses and sunshine. Markets had been at all time highs. We've had the most ferocious recovery, pretty much almost, in market history since its recent lows.
All of a sudden, though, massive sell-off on Friday. We're recording this the following Monday.
Markets so far today are actually up a fair amount. My big question for you is, what the heck just happened? Was it just a speed bump to higher highs from here, or is it significant in marking maybe a reversal of trajectory?

**Jonathan Wellum** (2:15)
Yeah, great questions. And I hope I can shed maybe a little bit of light on it. We can have a good discussion back and forth. Of course, we don't, there's no way that we have perfect knowledge on what exactly is happening. But I think with Friday, it seemed to spook the markets that the labor market in the United States was actually much more robust than anybody anticipated. We talked a little bit about this earlier in the year on a previous video, that in my view, I think the Trump policies, when it comes to the economic policies, are dead on if you want to actually build and grow an economy.
It doesn't in some way surprise me as much that those numbers are fairly strong. I think if you are going to cut taxes, cut regulations, take taxes off tips, Social Security, 100 percent depreciation on capital coming into your country, and then you do a whole bunch of tariff initiatives and tariff changes to generate more capital and on-shoring into your country, that has to grow your economy. There's no question about that. What's interesting, I find, is that you've also shrunk the size of the state, the public sector federally.
That's exactly what you want to do. You want to get money out of the public sector and into the private sector, and that will grow jobs. And people can criticize where the jobs came from and so forth. But I think overall, what you're seeing is a much more robust economy, particularly, I'm sitting up here in Canada, we got no growth.
In fact, I would argue it's probably negative. We've actually in a recession because we've had two negative quarters of growth. And in Europe, I don't have to tell you, it's abysmal over there, the UK and other countries around the world. So I think when you saw that, and a lot of economists still have, I think of a notion that just because you've got jobs increasing and growth, that that leads to inflation. Now, there's inflationary pressures. I'm not saying there aren't. But actually, if you grow the private sector, and you bring more capital, and you grow productivity, you actually should tame inflation over time. Now, again, we've got the war going on in Iran and energy prices up, so that's going to be inflationary. But I personally believe there was a massive overreaction based upon the job numbers, that those are exactly what you want to see, and you want to see a growing, more productive, private sector growth in the United States, and that will lead to more supply being produced, more manufacturing, and a stabilizing of inflation over time, albeit, again, there's some challenges. So I think the market on Friday got really spooked by that, and obviously the increasing interest rates, and that just caused this cascading sell-off in terms of a lot of the tech stocks. Mind you, Adam, those tech stocks have done exceptionally well. They're trading at high valuations anyway, and it doesn't take much to spook a market like that. So I don't think that should surprise too many people, that there's going to be more volatility going forward.