← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
The Markets Just Got Uglier: Here’s What To Do With Your Money Right Now
00:22:07
Buy the dip or hold your cash?
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Transcript33 lines
- [00:00]
Jean Chatsky
The economy is shaky, the markets are volatile and let's be real, we might already be in a recession and not even know it. If you are feeling unsure about your investments, you're not alone. But here's the good news. Our investing fixed portfolio is holding strong. Why? Well, I think it's because we don't just react to the headlines. We invest with a strategy, with confidence and alongside a community that is in this together. The best part, your first month is completely free. We are breaking down the markets, simplifying strategy and helping you build wealth with confidence. Join us today@investingfix.com that's fix with two X's. Let's grow your portfolio one smart decision at a time.
- [00:57]
Karen Feinerman
What I really like about the Mag 7, including Apple, is these are businesses with significant cash flow often emote around their business. I also include Netflix in the mag 7 and tremendous balance sheets. So they're never going to be forced to do something they don't want to do or they don't need to do anything. So that gives me a great deal of comfort.
- [01:25]
Jean Chatsky
Hey everybody, thanks so much for joining us today. On HER money. So my husband is a big Bill Simmons listener and whenever something big happens with the Celtics, Bill Simmons does an emergency pod. So this is an emergency pod. I'm Jean Chatsky. I'm not going to sugarcoat it. Things over the last few days have been bad. They have been pour a heavy glass of wine and look at my 401k while holding my breath and keeping one eye closed kind of bad. Trump's tariffs went to effect on Saturday and as of Sunday night, the S&P 500 had lost 15% of its value since Inauguration Day and had its worst performance since the start of the pandemic. And when asked about the markets, the president said, I don't want to see anything go down, but sometimes you have to take medicine to fix something. Which is not exactly the reassurance that I know any of you were looking for. Which is why I have asked Karen Feinerman to join me for a quick 20 minutes to help us make sense of what's happening, to talk about what we should be doing or not doing right now. You all know Karen. She is on CNBC's Fast Money. She is the CEO of Metropolitan Capital Advisors. She's the co founder and co host of our investing club for Women Investing Founder Fix. And just a quick reminder before we dive in, I'm not an investment advisor. This conversation is meant for educational purposes. So take what resonates but always consider your own financial situation before making moves. Karen, thank you so much. I know you just got off a plane.
- [03:18]
Karen Feinerman
No, that's fine. I'm good. I'm in la. It's fine. I'm happy to talk to you always, Jean, happy to talk to you about anything. But we can talk about this too.
- [03:28]
Jean Chatsky
Well, we'll talk about fun things another day. So what do you make of all of this?
- [03:36]
Karen Feinerman
What do I make of all of this? I think that the tariffs as they were rolled out were so far beyond what anyone that I know, including myself, expected. And so I think there was some concern with the way they were rolled out and then what the actual math it was. And so markets hate uncertainty. And rather than delivering any certainty on Liberation Day, I think what we got was another big dose of chaos, I think. And then over the weekend, of course we saw China hit back. And so now are we in a spiraling tit for tat or are we going to see cooler heads prevail? So all of that makes people very nervous for sure as well as really a concern about what will this do to the economy. And so the thing that I sort of focus on, as you know, I'm a long term investor and what I focus on is where do I think we'll be at some point in the future. And that's almost always, I think it will be higher than here. And one of the things that I really look at that gives me, it's sort of a, a guiding light for me is the vix, the volatility index, which it's really a mathematical thing that measures how much markets move within a day. But really what it, what most people might know it as is sort of the Greed and Fear index. So the higher it goes, the more fear is present. And so I follow that pretty closely. And when one's gut is telling you this is terrifying, I want to sell everything I own that coincides with a VIX that is very high. And to me that is a time to step in, not out. So I've done nothing the last few days until today. And as you know, I'm always long and I do have some hedges on, but still net, net even net of the hedges, I am always very long. So this has obviously been a very painful period.
- [05:52]
Jean Chatsky
Sure.
- [05:52]
Karen Feinerman
What I do is the VIX goes up and I'm just nauseated and, and then I cover some hedges and that's what I did today. I don't know if that's going to be right in the short term or not, but I try to follow this place playbook. And I can think of so many black swan kind of things that we've seen where the volatility index spikes. And when I, I think about the pandemic, right, that was something we had never seen. 9, 11, something we had never seen. The great financial crisis, something we had never seen. So we've seen a lot of things that we've never seen. And this is kind of the playbook. I, I use.
- [06:37]
Jean Chatsky
You often say that the market is not the economy and I think that is something very important to hold onto. There was a moment in trading today, more than a moment, there was a period of several hours where there was a rumor that this was all going to be unwound, that the President was going to take a 90 day pause on the tariffs and the market rallied. I wonder if you can separate the economy, which we thought was actually fairly strong going into all of this, from the markets.
- [07:14]
Karen Feinerman
Well, I think, you know, so sometimes we see euphoria in the markets that may be greater than what the underlying economy tells us. And sometimes we see fear in the markets. But the problem though with persistent fear is that CEOs are people too and if they're nervous, they are going to pull back. And so then you can get into a sort of negative, a vicious cycle of fear. And so holding back spending, holding back expansion plans and then you see people don't get hired or maybe they even get fired and then you get into that sort of vicious cycle. And so that's part of the fear of the market right now. That the economy, which had been on good footing, will now not be as well as might. We also have inflation with these tariffs that really, you know, the consumer pays. So both of those things, the fear of both of those things, even if they're not happening at the moment, that's enough to shake the market, understandably. So. Right. My guess is that we will see a big walk back in a lot of these tariffs.
- [08:29]
Jean Chatsky
My soon to be son in law sent me a text this morning. I love that I have a soon to be son in law. I know, I love one wants to talk to me. Which is just like that is amazing.
- [08:39]
Karen Feinerman
You have won the lottery.
- [08:41]
Jean Chatsky
I have. He sent me a text, he's like, are you buying? And my answer to him was I'm always buying. Right. I mean I am, I think I'm very much the typical retirement investor. I put money into the markets in my 401k and other retirement accounts and brokerage accounts on a regular basis in a very methodical way. I Buy the investments. Not all of them, but some of them that we tee up in our investing fix club, the one that's that sort of pique my interest. I'm not really an individual stocks investor overall. I'm much more of a funds investor and for me the individual stocks are a little bit more fun. But I have felt like I'm just gonna hold my course at this point. I checked my asset allocation. I'm lucky that I'm not carrying a lot of debt. But in a situation like this, for people who are heading into retirement and thinking, oh my goodness, the typical advice is if you experience a steep downturn in the very early years of your retirement, you should try to take a little less out of your portfolio. You should always try to have enough in bonds and cash that you could prevent yourself from having to sell when stocks are really are really down. Other than that, I think we really can't control these things. We can control our spending. Maybe we can continue to work a little longer. Although I know that for some people that's not an option. Are there other things that you think about for individual investors at times like this?
- [10:32]
Karen Feinerman
So you said you're always buying and that is my inclination too to always be buying. But I think for some people who aren't feeling quite comfortable enough sometimes sort of splitting the difference and buying some and keeping some in cash is the right thing to do. Because if it's just too, if it's too scary, you don't need to do all or none. You can do something in the middle. And so that's my fallback. What I hope Solomon esque wisdom.
- [11:07]
Jean Chatsky
I feel the same about taking money off the table. Right. If you're feeling really scared, then selling a little rather than selling everything to enable yourself to sleep at night is I think a really good move. I'm wondering about interest rates. We've been talking about 10 year treasuries and how intent the President and the Secretary of the Treasury, Scott Besant seem to be on getting the yield on the 10 year down which has happened. How much of all of this is about getting to a place where rates are lower?
- [11:45]
Karen Feinerman
Well, I think, you know, be careful what you wish for because if rates are lower because people are really concerned about the economy shrinking, that I don't think is going to provide the, the help to the housing market that one hopes for. Right. We need lower rates. You've talked a lot about how many people have mortgages that are so far below where we are now that those houses aren't coming to market. It's too expensive for people to lease that mortgage, right? So if you're in a recession, it's hard for people to feel comfortable buying a new home, even though maybe that might be the right thing to do. When rates are down, they're not down enough to shake out all that supply. It does allow them to sell 10 year bonds to fund the treasury at a lower interest rate. So that is a benefit. However, the flip side of that is if the economy is shrinking, then you are likely to have less in tax revenue and potentially more in expenditures that you might need to pay out unemployment benefits. And so it's not a pure benefit of having the 10 year be lower.
- [12:54]
Jean Chatsky
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- [15:40]
Karen Feinerman
So I. I have a big Mag 7 allocation, so this has been a painful run. But there's a lot that I like about the Mag 7. So let's put Apple aside for just a minute because that's a little bit of its own animal. But what I really like about the Mag 7, including Apple, is these are businesses with significant cash flow often emote around their business. I also include Netflix and the Mag 7 and tremendous balance sheets. And that last part is really so important. Tremendous balance sheets. So they're never going to be forced to do something they don't want to do or they don't need to do anything. So that gives me a great deal of comfort. You know, when the market's really going up and you own companies that have a lot of debt, those are really going to take off because if their business can improve and they can start paying off the debt and you just have more and more money going to earnings and not interest payments, and then you can see earnings really move. None of these companies, these are some of the biggest cash hoards in the history of the world. Right. So what they can afford to do is buy back their own stock.
- [16:52]
Jean Chatsky
Mm.
- [16:53]
Karen Feinerman
And that's often a very good thing for them to do. We're in an odd period right now. A lot of these companies report quarterly every fiscal quarter. So we just ended the March quarter. A lot of these companies are not able to be out in the market buying back stock. They need to wait until their earnings are released. So what might be a time where normally you would see some buying, significant buying by corporations of their own stock? You're not seeing it really right now. Although tonight, Broadcom did announce a buyback after the close.
- [17:24]
Jean Chatsky
As you look out into the weeks and months that follow, what are the things you're going to be paying the most attention to?
- [17:34]
Karen Feinerman
Well, the negative noise around this tariff rollout, to me, the most important thing will we see something in short order of a new sort of spin on how they're going to do that. And I think the opportunity is there to do multiple deals with many countries. And I hope they, I hope they do that. I think that we're going to see next week we're going to hear from JP Morgan and a number of other banks and I care about J.P. morgan. We own the stock. I've owned the stock for a long time. I love Jamie Dimon. I think that I like to see what they're earning here. But as equally as important as what is their take on the consumer, what is their take on the economy? I think in his letter, which maybe came out today or yesterday, which I haven't read yet, he is not a fan of the tariff rollout. And I think that's important to me. We started seeing this a few weeks ago, companies giving muted or sort of conservative guidance because they were very concerned about the tariffs. And so the bar for earnings has come down a little bit. But I think given how much the market sounds, I mean, think about it, Gene, if you were a CEO of a retailer right now, let's say, what would your guidance be?
- [18:52]
Jean Chatsky
I mean, I think it's really hard to tell exactly where the consumer is going to land.
- [18:58]
Karen Feinerman
Right, Right.
- [18:58]
Jean Chatsky
Because it feels as if, it feels as if these policies may not actually be. Be the same policies next week.
- [19:11]
Karen Feinerman
Right, right. That could be better. Right. That could be better.
- [19:15]
Jean Chatsky
It could be worse. I mean, as a consumer, I am definitely, I'm thinking more about everything that I am spending and I'm not necessarily budget constrained. We're all budget constrained to some degree. But I'm not, you know, I'm not counting every penny, but I am still thinking about it much more than I did before this started. And that does not bode well for all the retailers.
- [19:39]
Karen Feinerman
Right. It really doesn't. So if you're the CEO now, you're not going to get penalized. Your stock may get hit a little bit, but you're not going to get penalized for saying, you know what, we're going to be a little bit conservative here and we're going to give you sort of conservative guidance. And so what you thought maybe we would earn, we might not earn. So we're going to see that. Although it's going to be a little bit noisy because you did have some pull forward of retailers saying, I got to buy inventory in and maybe consumers thinking, if I want to buy a new whatever car, buy it now. Right, Car. I mean, we just tonight we saw from Apple they're having a big surge in spending from people who want to buy products before the tariff hits. So we're going to see some noise and it's going to be hard to decipher a consumer who's confident versus what is a consumer who's trying to front run a tariff. It's hard to know.
- [20:39]
Jean Chatsky
Yeah, absolutely. Well, this was, this was great. Thank you for doing this.
- [20:44]
Karen Feinerman
Of course, for you, Dean, I'll talk to you anytime about anything.
- [20:48]
Jean Chatsky
Thank you. For all of you who are interested in the markets, we're posting this show on a Tuesday. Tomorrow, our regular episode drops an episode with Jenny Harrington talking all about dividend paying stocks. So if that's a segment of the market that you're interested in, Jenny's got a new book out. We'll talk to her about that. And for any of you who want to learn more about investing, Karen and I would love you to join us for an Investing Fix session as we go forward with strategy and with confidence. We're meeting next week, April 14, 8pm Your first month, of course, is completely free. You can find out more about that@investingfix.com Karen, thanks so much.
- [21:32]
Karen Feinerman
All right, see you, Dean. Bye.
- [21:34]
Jean Chatsky
See ya. Bye. If you love this episode, please give us a five star review. On Apple Podcasts, we always value your feedback and if you want to keep the financial conversations going, join me for a deeper dive. HerMoney has two incredible programs. Finance Fix, which is designed to give you the ultimate money makeover, and Investing Fix, which is our investing club for women that meets bi weekly on Zoom. With both programs, we are leveling the playing fields for women's financial confidence and power. I would love to see you there. Her Money is produced by Hayley Pascal. Our music is provided by Video Helper and our show comes to you through Megaphone. Thanks for joining us and we'll talk soon.