The Indicator from Planet Money Episode: Economic Lessons Learned from Investopedia (and Ferris Bueller) Release Date: April 17, 2025

Hosted by Darian Woods and Waylon Wong

Introduction

In this engaging episode of The Indicator from Planet Money, hosts Darian Woods and Waylon Wong delve into the intricate world of economics, drawing insights from Investopedia and an unexpected nod to the classic film Ferris Bueller's Day Off. The episode, titled "Economic Lessons Learned from Investopedia (and Ferris Bueller)," explores current economic trends, historical tariff policies, and sophisticated investment strategies, all while making the complex subject matter accessible and entertaining for listeners.

Smoot-Hawley Tariffs: A Historical Cautionary Tale

The discussion kicks off with a deep dive into the Smoot-Hawley Tariff Act of 1930, a pivotal moment in U.S. economic history. Caleb Silver, the editor-in-chief of Investopedia, provides expert commentary on this significant legislation.

Caleb Silver [03:57]: "Despite a thousand economists who are urging him against it, the Tariff Act was added additional 20% tariffs on already highly tariffed goods to protect U.S. prices. It had the opposite effect."

Darian Woods highlights the enduring relevance of the Smoot-Hawley tariffs as a lesson in economic policy:

Darian Woods [04:16]: "The Smoot-Hawley tariffs have become a historical cautionary tale."

The hosts incorporate a humorous yet poignant reference to Ferris Bueller's Day Off, where a scene featuring Ben Stein's teacher lecture on the Tariff Act underscores its historical impact.

Waylon Wong [04:43]: "A high school teacher... is lecturing about these tariffs to a bunch of slack-jawed, unresponsive students."

This blend of historical analysis and pop culture serves to illustrate the recurring themes in economic policy and their long-term consequences.

Investing Aphorisms: "Don't Catch a Falling Knife" vs. "Buy the Dip"

Transitioning from historical tariffs to modern investment strategies, Woods and Woods explore two contrasting philosophies prevalent among investors today.

Caleb Silver [05:35]: "Don't catch the falling knife. You don't know when the sell-off is gonna be over. You may miss some of the upside if it rebounds, but at least you're not gonna cut yourself if it keeps falling."

The phrase "Don't catch a falling knife" serves as a warning against buying stocks during a rapid decline, emphasizing caution in volatile markets. In contrast, "Buy the dip" encourages investors to purchase assets during price drops to capitalize on potential rebounds.

Waylon Wong [06:35]: "Don't try to catch a falling knife is one of these investing tips you might hear, especially when the stock market is volatile like it's been lately."

The hosts discuss the conflicting advice these aphorisms present, highlighting the current market's unpredictability and the challenges investors face in making informed decisions.

Presidential Influence on Market Sentiment

A noteworthy moment in the episode is President Trump's provocative statement on Truth Social, declaring:

Waylon Wong [07:06]: "This is a great time to buy."

This declaration, made amidst ongoing tariff negotiations, sparked a surge in stock prices and triggered a wave of searches for "insider trading" on Investopedia. Caleb Silver reflects on the impact of such statements on market behavior:

Caleb Silver [07:37]: "This has just been one of those times of intense volatility and uncertainty. The good side is that people are trying to get smarter about it and figure out what exactly is happening."

The episode underscores the significant influence that presidential rhetoric can have on investor psychology and market dynamics.

Navigating Volatility: Inverse Volatility ETFs

The final segment of the episode addresses the complex topic of Inverse Volatility ETFs, a trending subject among Investopedia's readership.

Darian Woods [07:51]: "Inverse Volatility ETFs are a mouthful, but we'll break it down."

Inverse Volatility ETFs are sophisticated financial instruments designed to profit when market volatility decreases. The hosts explain the components and risks associated with these investments:

Caleb Silver [09:00]: "You profit when all the chaos subsides. For every crisis or madness in the stock market, people are betting on it through these ETFs."

Waylon Wong draws a parallel between these ETFs and the earlier discussion on "catching falling knives," emphasizing the high-risk nature of such investment strategies:

Waylon Wong [09:13]: "Trying to profit from volatility seems like trying to catch a bucket of falling knives. It's a very scary strategy."

Caleb Silver advises that Inverse Volatility ETFs are best suited for advanced investors who understand the inherent risks:

Caleb Silver [09:38]: "Those that know how to trade volatility ETFs, hopefully, they know what they're doing. This is for advanced investors and advanced traders."

The segment concludes with a humorous reflection on historical tariffs, suggesting that economic policies should come with warnings about their potential impacts:

Darian Woods [10:06]: "Maybe the Smoot Hawley Tariff article should come with a warning."

Conclusion

In this episode, Darian Woods and Waylon Wong adeptly navigate through a spectrum of economic topics, from historical tariff policies to contemporary investment strategies, all enriched by insights from Caleb Silver of Investopedia. By intertwining humor, historical context, and expert analysis, the hosts provide listeners with a comprehensive understanding of current economic challenges and the lessons they impart.

Whether you're an economic enthusiast or a casual listener, this episode offers valuable takeaways on market volatility, the influence of political statements on economic behavior, and the nuanced strategies investors employ to navigate uncertain financial landscapes.

Notable Quotes:

• Caleb Silver [03:57]: "Despite a thousand economists who are urging him against it, the Tariff Act was added additional 20% tariffs on already highly tariffed goods to protect U.S. prices. It had the opposite effect."

• Darian Woods [04:16]: "The Smoot-Hawley tariffs have become a historical cautionary tale."

• Caleb Silver [05:35]: "Don't catch the falling knife. You don't know when the sell-off is gonna be over..."

• Waylon Wong [07:06]: "This is a great time to buy."

• Caleb Silver [07:37]: "This has just been one of those times of intense volatility and uncertainty..."

• Waylon Wong [09:13]: "Trying to profit from volatility seems like trying to catch a bucket of falling knives."

This comprehensive summary encapsulates the essence of the episode, providing a clear and detailed overview of the discussions, insights, and conclusions presented by the hosts and guest Caleb Silver. It offers a valuable resource for those seeking to understand the current economic climate and the various factors influencing it.