BiggerPockets Money Podcast: Tariffs Pause, Stocks Erupt, But the Volatility Could Be Far From Over
Release Date: April 10, 2025
In this bonus episode of the BiggerPockets Money Podcast, host Scott Trench teams up with guest Amberly Grant and returning co-host Mindy Jensen to navigate the turbulent waters of recent economic developments. The episode delves into the abrupt reversal of steep U.S. tariffs, the resultant stock market surge, and the broader implications for investors amidst ongoing market volatility.
Market Turmoil and Tariff Reversal
Scott Trench opens the discussion by addressing major market shifts, highlighting his strategic decision to sell his stock positions in February due to high valuations. He underscores the unpredictability introduced by the sudden pausing of tariffs on approximately 70 countries, which led to a remarkable 7% surge in the S&P 500 within hours.
"We have just heard that Donald Trump is reversing a series of steep tariffs on about 70 countries... the market is up like 7%, several hundred points for the S&P 500 in a matter of hours."
— Scott Trench [00:55]
Scott Trench’s Analysis: The Long-Term Impact of Tariffs
Scott delves into his bearish outlook, emphasizing that high stock valuations—specifically a 38 times Shiller P/E ratio—indicate significant risks. He posits that tariffs will permanently alter global trade dynamics, compelling countries like Canada to seek new trading partnerships beyond the U.S., which could lead to increased costs and supply chain complexities.
"Tariffs... are going to permanently alter the world order and change the trajectory of how countries... think about building sustainable and durable economies."
— Scott Trench [02:01]
Amberly Grant’s Canadian Perspective
Amberly Grant provides an international viewpoint, focusing on how Canadian businesses and consumers are reacting to the tariff changes. She notes a shift in travel and trade patterns, with Canadians favoring local or alternative destinations over the U.S., reflecting a broader erosion of trust and economic collaboration.
"Canadians... are going to start looking abroad to make relationships. And even if it does cost more, Canadians are okay with that because we just don't want to be messed with."
— Amberly Grant [05:28]
Amberly also highlights the social and economic cohesion in Canada, suggesting that the damage to U.S.-Canada relations will have long-lasting effects, particularly among Millennials who value economic stability and international partnerships.
Investment Strategies Amid Volatility
The conversation shifts to personal investment strategies in light of the current market instability. Amberly emphasizes maintaining a disciplined approach through dollar-cost averaging, continuing to invest steadily despite market fluctuations, and preserving liquidity with a larger emergency fund.
"I do not have a plan to get back in. So therefore, I will not sell... I am not gonna make any moves. I am sitting still."
— Amberly Grant [06:29]
In contrast, Scott discusses his pivot towards real estate as a hedge against inflation and increased cash holdings, expressing discomfort with the volatile stock market. He shares that this is the first time he's actively adjusting his portfolio based on current events, moving away from his usual "set it and forget it" index fund approach.
"I'm not moving back into the market right now... I'm playing a safer game."
— Scott Trench [07:25]
Federal Reserve Policies and Interest Rates
Scott delves into the complexities of Federal Reserve policies and their impact on interest rates. He analyzes the inverted yield curve as a signal of potential rate cuts and expresses concern over the long-term implications of reduced foreign investment in U.S. debt, which could destabilize bond portfolios.
"A bond portfolio could be very, very volatile over the next year in ways that I can't predict."
— Scott Trench [17:38]
Historical Context and Emotional Investment Decisions
Mindy Jensen brings a historical perspective, referencing the 2008 financial crisis to illustrate the challenges of active trading during economic downturns. She emphasizes the importance of sticking to established investment plans and avoiding panic-driven decisions, advising listeners to educate themselves and remain resilient.
"The stock market is going to go down again. Maybe not tomorrow, maybe not next week, maybe not next year, but it will go down."
— Mindy Jensen [29:47]
Mindy encourages listeners to catalog their feelings about market fluctuations and make informed decisions based on their financial goals rather than reacting to short-term volatility.
Conclusion and Future Outlook
As the episode wraps up, Scott and Mindy reflect on their investment philosophies and the importance of tailored strategies based on individual circumstances. Scott reiterates his cautious stance, prioritizing wealth preservation over aggressive gains, while Mindy underscores the value of disciplined investing and emotional stability. They invite listeners to engage with the BiggerPockets community for further discussions and guest recommendations to explore diverse investment perspectives.
"What matters is how things go over years and how wealth is built over years and decades."
— Scott Trench [38:07]
Key Takeaways:
- Market Volatility: Sudden policy changes, such as the reversal of tariffs, can lead to significant short-term market movements but may signal deeper, long-term uncertainties.
- Global Trade Dynamics: Tariff adjustments are likely to reshape international trade relationships, with countries like Canada seeking greater economic independence.
- Investment Strategies: Diversifying investment portfolios—through real estate, cash holdings, and disciplined stock investing—can mitigate risks associated with market instability.
- Federal Reserve Influence: Interest rate policies remain unpredictable amid economic turmoil, affecting bond portfolios and overall investment strategies.
- Emotional Resilience: Maintaining an informed, disciplined approach to investing helps navigate the emotional challenges posed by market fluctuations.
This episode provides a comprehensive analysis of current economic challenges, offering valuable insights for investors seeking to understand and respond to ongoing market volatility.