How To Invest In The Volatile Trump 2.0 Era? | New Harbor

**Adam Taggart** (0:05)
Welcome to Thoughtful Money, I'm Thoughtful Money founder and your host, Adam Taggart. Welcoming you here for another monthly recap with the gentlemen, lead partners from New Harbor Financial, one of the financial advisory firms endorsed by Thoughtful Money. I'm joined as usual by John Lodra and Mike Preston, and I've asked them to come here this week because there has been so much going on in the markets just in the past week alone. A lot of curveballs that many people didn't see coming, China's deep seek, obviously, a shot out of the blue, the tariffs being applied as quickly and furiously as they were, and then some of the immediate fallout from that, that's still ongoing as the time of this recording. It's obviously something that has been keeping the markets on its toes, but also getting investors, I think, understandably, kind of nervous and a little bit overwhelmed. So I wanted to bring the guys on, we'll get their reaction to a lot of these big developments that are going on, but also try to just ground it in, okay, practically, what does this mean for the average investor? What should the average investor consider doing here? So, John, Mike, thanks so much for joining me, guys. Look, like I said, lots going on. Maybe we start with the tariffs and the trade wars, just because that is going on fast and furiously at the day that we're recording this. And folks, I apologize, I'm sure some of the things we're talking about will probably be old news. You know, in the 24 hours it takes for this video to get edited and posted. But let's see, John, why don't I kick off with you here? So we've had just to set the stage. We had on Saturday, the Trump administration apply tariffs to several of its largest trading partners, 25% tariff on Mexico, 25% tariff on Canada, 10% tariff on China, and 10% tariff on Canada's energy exports. So those were given a slightly less punitive tariff. So a lot of dust has been kicked up in the air. Markets were pretty deeply in the red Sunday night going into this week. But then as they opened very quickly, we found out that Mexico was sending 10,000 troops to the border. So Trump is giving them a month reprieve on the tariffs there. I'm sure there will be several other things that have happened, again, by the time this video gets posted.
But what are you guys watching? What impact do you expect this to have? And then let's get down to, okay, what does it mean for investors? Great.

**John Lodra** (2:34)
Yeah, thank you, Adam. Great to be with you here. And look, we are getting exactly what we should expect by the proclaimed Tweeter-in-Chief, right? If we thought we were going to get anything but rapid-fire headlines and news items, we'd be fooling ourselves, and we're getting exactly that. Let's take a step back. Let's talk about, well, we'll get into the details here, but let's really just take a step back and bring it to a broad takeaway for the kinds of folks that we serve, everyday clients that are, obviously, they're worried about the news, and there's plenty beyond financial markets to be worried about today. So a lot on people's minds. And at the end of the day, our job is to help sort through what's signal, what's noise, and really what it matters to their financial security. And taking a step back, let's talk about where we are in the market cycle. We've talked at Nausium, frankly, but very much relevant, and we'll keep making this case. We are in very, very extreme valuation territories for the US stock market anyway. So it doesn't mean anything in the short term and so far as a timing tool, but it means, if history's in a guide, it means a very significant amount of relevance for what it likely means over the next decade for returns in stock. The stock market.
So when you have valuation extremes like this, it's kind of like a crackling fire that you put an open gasoline can next to. It doesn't matter what spark from that fire goes into the can to ignite the can. Any spark will do. And that's what these kinds of headlines could eventually turn out being. It's the cumulative effect of headlines of tariffs and the deep seek and all that stuff that starts to erode away at the can-do-nothing-wrong kind of market in the eyes of investors. There's been a tremendous amount of bullishness and sentiment and over heavy positioning in stocks, for example. That'll change, but it's going to take market action and the psychology collectively to shift. These developments are very noisy. We're not going to sit here today and say exactly what's likely to happen, because we don't know. It's unknowable. Nobody knows. In fact, it takes quite a bit of hubris to make a bold claim about the exact ramifications of tariffs, whether the tariffs end up even going into place or not. But in the spirit of that, I want to kind of share a couple of anecdotes from Trump's first term, because I think it will help make a point here. So here is a chart that basically shows, in his first term, a number of trade tension type of headlines, spanning the 2018-2019 time frame. And it shows basically those major things. And yeah, they're different than the news of the recent days, but it still makes a point. What you can see here, if you look at the World Stock Market Index, both on a daily change and one week change from those announcements, rather much a nothing burger. So one key takeaway here is there may be sectors of the market, sectors of the economy that end up getting hurt more than others if these things come to pass. But that just underscores the importance of having a tactical approach that is not wedded to any one sector or theme, but can be flexible and respond to leadership and laggardship as they express themselves in the market. There's a big question mark if tariffs do get put into place. What does that mean for inflation? Well, here again, we don't know for sure. Even just like let's talk about Scott Besson, the new Treasury Secretary. Even he has put out conflicting messages about what tariffs mean in so far as inflation. Some of his interviews said, yeah, they're inflationary, some of them said no, they're not. So even the right of the Treasury Office is sending mixed signals. This is a chart of inflation going back to 2018