Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: It's been a bewildering week for retail investors trying to
Speaker 2: make sense of global markets. After US President Donald Trump
Speaker 2: unveiled sweeping new tariffs, we saw ten trillion dollars in
Speaker 2: stock market value disappear. The US president is doubling down
Speaker 2: on an economic policy that most economists think is de
Speaker 2: anchored from reality. Then came Wednesday's stunning rebound, remarkable rally
Speaker 2: we're seeing in the markets right now, up nearly ten
Speaker 2: percentage points on the Nasdaq, and today markets have slid again.
Speaker 2: Yesterday's terraf for Pree did not last long, with Ustok's
Speaker 2: lab resuming their declined bonds not getting much love, the
Speaker 2: dollar sliding, and corporate credit default risks rising. Meanwhile, the
Speaker 2: US and China, the world's two largest economies, have continued
Speaker 2: to ramp up the pressure on each other with a
Speaker 2: series of compounding tariffs. President Trump's tariff on Chinese imports
Speaker 2: have reached one hundred and forty five percent, factoring in
Speaker 2: a twenty percent levee placed on China over its role
Speaker 2: in fentanyl trafficking, and China has said it's raising tariffs
Speaker 2: on US imports to eighty four percent. Bloomberg's Charlie Wells says,
Speaker 2: all of this creates a lot of uncertainty for businesses,
Speaker 2: which translates into uncertainty for investors of all kinds.
Speaker 1: We actually had a Bloomberg report about Walmart telling a
Speaker 1: company just a few days ago in China not to
Speaker 1: put sticker prices on Christmas ornaments because there's just so
Speaker 1: much uncertainty about how much things are going to cost
Speaker 1: come Christmas. So, you know, beyond ninety days, beyond this
Speaker 1: pause that Trump has put into place, there's still going
Speaker 1: to be a lot of uncertainty and that's probably going
Speaker 1: to play out in the stock market too.
Speaker 2: As a personal finance reporter, Charlie hears from a lot
Speaker 2: of people looking for guidance from experts on what financial
Speaker 2: moves they should be making. And he says, these past
Speaker 2: few weeks, everyone's been wondering the same thing.
Speaker 1: So the big question that I get is really simple,
Speaker 1: but it's a really hard one to answer, and it's
Speaker 1: what should I do with my money? Right now?
Speaker 2: I'm Sarah Holder, and this is the big take from
Speaker 2: Bloomberg News today on the show. In the midst of
Speaker 2: all this uncertainty. We're going to take a look at
Speaker 2: your money. We'll here expert advice on what to do
Speaker 2: with it right now and in the weeks and months ahead.
Speaker 2: Wild swings in the stock market are anxiety inducing for
Speaker 2: all kinds of investors. So if you're nervous, you're not alone.
Speaker 2: Charlie says he's heard from a lot of readers this week,
Speaker 2: including someone who did the one thing financial experts really
Speaker 2: don't want their clients to do.
Speaker 1: She said that she was so relieved that she sold
Speaker 1: out of her stock portfolio. And this was someone in
Speaker 1: her thirties. This is someone who has a long time horizon,
Speaker 1: who you know, any expert would say has a really
Speaker 1: high risk tolerance. Instead of kind of staying in the
Speaker 1: market as most financial advisors would recommend, she sold out
Speaker 1: and is sitting in cash. And that's kind of not
Speaker 1: the sort of thing that you're supposed to do, But
Speaker 1: it represents the level of fear that there is in
Speaker 1: the market right now. It represents the fact that people
Speaker 1: are really trying to navigate the uncertainty right now, and
Speaker 1: a lot of people think that that's just being in cash,
Speaker 1: but that's not a great idea, and we just have
Speaker 1: so much data on that. When you sell, you lock
Speaker 1: in the loss, but when you stay in the market,
Speaker 1: it's just a paper loss that very likely is going
Speaker 1: to recover.
Speaker 2: What about if you have less risk tolerance, if you're older, say,
Speaker 2: if you're nearing retirement.
Speaker 1: This is one of the issues that has been really
Speaker 1: difficult lately. People who need to sell because they are
Speaker 1: going to leave the workforce because they are retiring. And
Speaker 1: a lot of people had asked, you know, how much
Speaker 1: stock should I have? Is this market going to keep
Speaker 1: going up and up? And a lot of you know,
Speaker 1: people who were nearing retirement I think, were maybe a
Speaker 1: little bit overly optimistic about the trajectory of the stock
Speaker 1: market because one of the things that we know is
Speaker 1: that you know, it does recover after downturns, but it
Speaker 1: also turns down, and so just getting caught up in
Speaker 1: some of this timing I think has been difficult for
Speaker 1: a lot of retirees. And there's been this temptation over
Speaker 1: the past two three years, as we've seen this huge
Speaker 1: stock rally to maybe over allocate to stocks because it
Speaker 1: seems like the good times are going to keep on rolling.
Speaker 1: As we learned over the past week they're not.
Speaker 2: Well. One of the things that investors have been paying
Speaker 2: particular attention to, something we covered on The Big Take yesterday,
Speaker 2: where the swings in the bond market. Earlier this week
Speaker 2: we saw the selloff in US treasuries which sent yield surging.
Speaker 2: Can you explain why that's such a big deal.
Speaker 1: It's a big deal because it was really unusual. And
Speaker 1: so usually what happens is is when there's a lot
Speaker 1: of fear in the stock market, investors want to go
Speaker 1: someplace safe. They want to go someplace where they know that,
Speaker 1: you know, they've got the full faith and credit of
Speaker 1: something that's really responsible, and usually that is the US
Speaker 1: government bond market. Those are US treasuries that people tend
Speaker 1: to turn to, and so when stock prices go down,
Speaker 1: people usually want US treasuries, these bonds, and so those
Speaker 1: bond prices go up and then the yields go down.
Speaker 1: But this past week, something really weird happened, and it
Speaker 1: was that as stocks went down, prices went down, which
Speaker 1: meant that bond yields went up. And this is just
Speaker 1: not something that we're used to seeing in financial markets.
Speaker 2: Well, if US treasuries are looking less safe, what does
Speaker 2: that mean for the typical sixty forty split many of
Speaker 2: us think of as classic investing advice for portfolios.
Speaker 1: Yeah, so I think that, you know, the sixty forty
Speaker 1: is a very you know, time tested strategy. It's been
Speaker 1: under pressure over the past few years of kind of
Speaker 1: getting the right mix between stocks and bonds, getting risk
Speaker 1: from stocks with the safety of bonds. And I think
Speaker 1: if there is this belief that US treasuries are not
Speaker 1: as secure, you know, as we've known them to be
Speaker 1: for so many decades, that maybe that strategy isn't a
Speaker 1: smart one. But I think it's too soon to call
Speaker 1: for the end of the sixty to forty portfolio. I
Speaker 1: think that one point that financial advisors always make to
Speaker 1: me is just because you're seeing one day this highly
Speaker 1: unusual event in markets, that could look like evidence that
Speaker 1: people no longer have full faith and confidence in the
Speaker 1: in the United States, that there is concern about the
Speaker 1: credit worthiness of the United States. You might feel that
Speaker 1: one day, but then the next things start to recover
Speaker 1: and we move on, and so making a kind of
Speaker 1: drastic change changing some of these fundamental assumptions that we
Speaker 1: have can be really dangerous.
Speaker 2: I want to make sure people understand that the significance
Speaker 2: of higher yields in the bond market, how might that
Speaker 2: show up in people's everyday lives.
Speaker 1: Yeah, so you know, the everyday person isn't necessarily sitting
Speaker 1: around thinking about the yield on the tenure treasury. But
Speaker 1: ten year treasuries are really important because they're benchmarks for
Speaker 1: a lot of the consumer products, the kind of consumer
Speaker 1: borrowing that we see in the everyday economy. So the
Speaker 1: ten year treasuries used as a benchmark for thirty year mortgages,
Speaker 1: It influences student loan borrowing rates, credit card rates, and
Speaker 1: so it really does trickle down into the everyday economy.
Speaker 1: So if you're seeing that yield go up really high,
Speaker 1: that means basically that you know, mortgage prices will eventually
Speaker 1: be higher, that the amount that it costs to borrow
Speaker 1: will be higher because that benchmark that so many lenders
Speaker 1: use has gone up.
Speaker 2: So, Charlie, people are coming to you asking what should
Speaker 2: I do with my money right now? Bloomberg recently published
Speaker 2: a piece about investing in time of market uncertainty, and
Speaker 2: one thing that the experts who spoke to Bloomberg encourage
Speaker 2: everyday investors to do was evaluate their portfolios. What does
Speaker 2: that actually look like in practice, and what do experts
Speaker 2: say people should do right now?
Speaker 1: Advisors usually say, you know, before you make any moves
Speaker 1: at all, before you try to take advantage of moves
Speaker 1: in the market, Before you know, you try to buy
Speaker 1: the dip. As we hear a lot of people talking about,
Speaker 1: you just want to make sure that you're in a
Speaker 1: really safe, comfortable financial position where if the uncertainty in
Speaker 1: the stock market translated into say the job market, and
Speaker 1: you were to lose your job, you would be okay
Speaker 1: for the length of time that it might take for
Speaker 1: you to find another job. And so really step one
Speaker 1: whenever we're in a time of uncertainty is to make
Speaker 1: sure you've got an emergency fund that you know. That
Speaker 1: number on the emergency fund varies from as little as
Speaker 1: three months to a year, but advisors really say, you
Speaker 1: want to have three months to a year's worth of
Speaker 1: salary socked away just so you can absorb any shocks.
Speaker 1: So that's kind of step one. And even if you've
Speaker 1: got that, even if you've you know, you feel like
Speaker 1: your savings are pretty good. Something that you can do
Speaker 1: in a moment like now is just to kind of
Speaker 1: take stock just just to check in. I think a
Speaker 1: lot of times we've got you know, some savings in
Speaker 1: one bank account, we've got you know, eye bonds somewhere else,
Speaker 1: we put you know, the four oh one k in another,
Speaker 1: and just kind of getting it all organized. Really is
Speaker 1: step one.
Speaker 2: One of the first steps for people right now might
Speaker 2: be to take stock of where they're at. But something
Speaker 2: we keep hearing is don't look at your four to
Speaker 2: oh one k. Is there a point at which that changes?
Speaker 2: Is there a point where financial advisors say people should
Speaker 2: jump in, should look closer at their four oh one
Speaker 2: ks in a time of market uncertainty.
Speaker 1: Yeah, So advisors don't like people to look at their
Speaker 1: long term investments because you know, historically, we know that
Speaker 1: stock markets recover that anyone who does look at their
Speaker 1: four oh one k now is probably going to see
Speaker 1: a really disappointing dip. But that doesn't mean that you
Speaker 1: can't do nothing. And I think one of the points
Speaker 1: that I've heard from experts over the past few weeks is,
Speaker 1: you know, now could be a good time to kind
Speaker 1: of reassess your investment strategy and dollar cost average. If
Speaker 1: you do want to make some kind of change. And
Speaker 1: so what that means is, instead of say, you know,
Speaker 1: dumping a bunch of cash into the market right now,
Speaker 1: you might take a certain amount and put it in
Speaker 1: over a fixed amount of time. So say, instead of
Speaker 1: putting you know, ten thousand dollars into the stock market
Speaker 1: right now because you think prices are really good, you
Speaker 1: might put two thousand into the market for the next
Speaker 1: five months. And what that does is it helps you
Speaker 1: get access and exposure to the stock market, but without
Speaker 1: necessarily risking the fact that stocks could keep going down
Speaker 1: from here right. I think that's one of the main concerns,
Speaker 1: and that's one of the reasons why advisors don't like people,
Speaker 1: you know, looking at these long term investments too much,
Speaker 1: because it could make them feel like, oh, my goodness,
Speaker 1: you know, Apple's down, Tesla's down, everything's down. I'll get
Speaker 1: a great discount. Dollar cost averaging allows you to kind of, yes,
Speaker 1: clock some of what seems like a discount now, then
Speaker 1: also hedge the fact that these stocks could be discounted
Speaker 1: even more in the future.
Speaker 2: So it's not just don't look at your four owe
Speaker 2: k because it might make you super anxious. It's don't
Speaker 2: look at your four o one k because you don't
Speaker 2: want to make rash decisions.
Speaker 1: That's right, But also you can make decisions and you
Speaker 1: can look to see, like, you know what, maybe I'm
Speaker 1: not as comfortable with how much equity I have in
Speaker 1: my portfolio. And what one really smart advisor told me
Speaker 1: was use this as a little bit of a test
Speaker 1: as a sign, like, how did the past week make
Speaker 1: you feel? Were you comfortable seeing that four to oh
Speaker 1: one k go down? Or was it just too much?
Speaker 1: And if it was just too much, you might need
Speaker 1: to change into less risky assets. You might need to
Speaker 1: think about out maybe more bonds, you might need to
Speaker 1: think about holding more cash. It's just sort of a
Speaker 1: sign that maybe the way that you've allocated your portfolio
Speaker 1: isn't right for you.
Speaker 2: So that's what experts are saying you do right now
Speaker 2: to get through this period of market uncertainty. But what
Speaker 2: about down the road that's next. On Wednesday morning, just
Speaker 2: before the White House announced a pause of some tariffs
Speaker 2: that sent market surging, President Donald Trump posted on truth
Speaker 2: Social Be Cool. He said, this is a great time
Speaker 2: to buy. I wanted to ask Bloomberg Personal finance reporter
Speaker 2: Charlie Wells if he was hearing the same from financial experts.
Speaker 2: Should everyday investors start moving money into the market.
Speaker 1: So I'll give you a qualified yes, And it's not
Speaker 1: a terrible time to buy the dip if and this
Speaker 1: is a big if you have the time horizon, you
Speaker 1: have the risk tolerance, and you have the cash to
Speaker 1: do it. So the big picture idea here is that
Speaker 1: when the stock market goes down in a lot of ways,
Speaker 1: it means that a lot of high quality companies that
Speaker 1: maybe were overvalue, that maybe were just expensive, there are
Speaker 1: prices come down, and there's a high likelihood that at
Speaker 1: some point in the future, maybe even the near future,
Speaker 1: there are prices will go back up again. And so
Speaker 1: if you're someone who has their emergency fund covered, if
Speaker 1: you're someone who has paid off high interest debts, then
Speaker 1: maybe this is something that you could think about and
Speaker 1: really kind of in the broadest strokes, people who are
Speaker 1: further away from retirement, who have a lot more time
Speaker 1: for the stock market to recover, or in a position
Speaker 1: where they could do this. And so yes, every financial
Speaker 1: advisor that I called this week told me that now
Speaker 1: could be a good time to buy the dip if
Speaker 1: you do it in a responsible way.
Speaker 2: Are there any industries that financial experts say are better
Speaker 2: safer bets right now? Any industries that have generally been
Speaker 2: recession proof.
Speaker 1: So I get a lot of vanilla answers when I
Speaker 1: ask about this, and advisors are always really reluctant to
Speaker 1: tell me, you know, go into this particular industry. When
Speaker 1: advisor in California talked about how, you know, there is
Speaker 1: some concern about the direction of the US and if
Speaker 1: that is a conviction that you have, you might want
Speaker 1: to look at global companies global indices as well. And
Speaker 1: then you know, generally in times of recession, people talk about,
Speaker 1: you know, investing in areas that consumers are still going
Speaker 1: to spend on even if they've lost their jobs, right,
Speaker 1: So that would be consumer staples, healthcare, the sorts of
Speaker 1: things that people need to buy regardless of how flush
Speaker 1: they're feeling. But the important thing here really, and I
Speaker 1: just this comes up all the time, and I think
Speaker 1: it is because it is good advice. You want to
Speaker 1: be diversified, and it's so fun to think that you've
Speaker 1: got the insider info on one particular company, but they're
Speaker 1: the high probability is you might not know as much
Speaker 1: as someone whose entire job it is to follow stocks,
Speaker 1: to follow a particular company, and so diversification really is important.
Speaker 2: Well, right, what about other places to investor capital outside
Speaker 2: the stock market, like buying property or buying commodities like golds?
Speaker 2: What do experts say the move is there?
Speaker 1: So, you know, I think for the average investor, it's
Speaker 1: really hard to find, you know, the right balance. I
Speaker 1: think diversification is important. I think a lot of portfolios,
Speaker 1: especially for younger people, probably should be, you know, more
Speaker 1: in stock than almost anything else. But we're inundated with
Speaker 1: thin influencers, with internet articles about you know, storage units
Speaker 1: and rental properties and all of this stuff. And one
Speaker 1: very real conversation I have with a financial advisor we
Speaker 1: address these kind of alternate investment ideas, and you know
Speaker 1: what he told me was, if you want to invest
Speaker 1: in something, the best thing that you can invest in
Speaker 1: is your job, because you know what the return is
Speaker 1: going to be on that investment, you know what the
Speaker 1: risks are, and actually the amount of money that you
Speaker 1: get from your job is probably a lot more than
Speaker 1: it's going to be from a storage unit business that
Speaker 1: you take part in. And then think about things like gold.
Speaker 1: I mean, it's reaching peaks right now. I think people
Speaker 1: have tried to count out gold for a long time. Obviously,
Speaker 1: owning physical gold is more challenging than stocks. There are ETFs,
Speaker 1: of course that you can buy, but you know, small
Speaker 1: allocations here, I think really kind of sticking to the
Speaker 1: bread and butter is what most mainstream advisors would recommend.
Speaker 2: That's so funny. He's like, get off TikTok, stop browsing
Speaker 2: commodities markets, just do your job. Literally that well, it's
Speaker 2: really hard to time the market, as we've been talking about,
Speaker 2: especially in a volatile whip sawing period like this. But
Speaker 2: what about timing other money moves. We've been reporting at
Speaker 2: Bloomberg on some consumers panic buying certain products. What do
Speaker 2: the experts say about these sorts of purchases, whether it's
Speaker 2: a car or like a home appliance like an air conditioner.
Speaker 1: So the best practice is to ask yourself do you
Speaker 1: need it and can you afford it? And if you
Speaker 1: can answer yes to both of those questions, you should
Speaker 1: probably buy it. But there's a flip side here where
Speaker 1: you know, some economists have been saying that these terriffs
Speaker 1: could eventually lead to a recession in recessions, companies often
Speaker 1: have to discount because demand goes down, so you don't
Speaker 1: want to get into a position where you've rushed to
Speaker 1: buy something to try to beat tariffs, and then this
Speaker 1: hypothetical world of a recession sets in and then things
Speaker 1: got cheaper.
Speaker 2: I asked you last time we spoke about whether pulling
Speaker 2: out of the stock market altogether would be a strategic
Speaker 2: move if the safest place for your money was under
Speaker 2: your mattress. You said. Advisors were saying, essentially, keep putting
Speaker 2: a study amount into the market over time, in part
Speaker 2: as a hedge against inflation. What about now, Has anything changed?
Speaker 1: I would say no. In fact, I would say that
Speaker 1: the standard advisor, who knows that you've got all your
Speaker 1: basis checked, would say keep investing, keep going, because even
Speaker 1: in the past few days, we've seen these significant drops,
Speaker 1: but as we've been talking about whipsawing, we've also seen recoveries.
Speaker 1: And that is kind of in a nutshell what happens
Speaker 1: in the stock market. You know, it feels like decades
Speaker 1: have been compressed down into days. But if you take
Speaker 1: what's happened over the past few days and then stretch
Speaker 1: it out over many decades, That's what happens. It goes up,
Speaker 1: it goes down, and then goes back up again.
Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder.
Speaker 2: This episode was produced by David Fox. It was edited
Speaker 2: by Patty Hirsch and Brian Chapata, fact checked by adrian
Speaker 2: Na Tapia, and mixed and sound designed by Alex Suguia.
Speaker 2: Our senior producer is Naomi Shaven. Our senior editor is
Speaker 2: Elizabeth Ponso. Our deputy executive producer is Julia Weaver. Our
Speaker 2: executive producer is Nicole Beamster. Boord Sage Bauman is Bloomberg's
Speaker 2: head of podcasts. If you liked this episode, make sure
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Speaker 2: We'll be back tomorrow.