Latest / Money Matters with Greg / Episode 154: Market Mayhem: Navigating the Wildest Trading Week Since WWII

Transcript

Episode 154: Market Mayhem: Navigating the Wildest Trading Week Since WWII · Money Matters with Greg

• 0:19
  Speaker 1: Thank you week to get inspired and take control of your financial future.
• 0:23
  Speaker 1: Let's get started.
• 0:25
  Speaker 1: Securities and investment advisory services offered through LPL Financial, a registered investment advisor member, finra, sipc.
• 0:35
  Speaker 2: All right, good afternoon and welcome to Money Matters with Greg.
• 0:50
  Speaker 2: I'm Greg Farrell, ceo and President of Farrell Wealth.
• 0:52
  Speaker 2: It's a wealth management firm here locally in Valparaiso, indiana.
• 0:56
  Speaker 2: It is April 16th.
• 0:59
  Speaker 2: I hope everyone had a good tax day and got through taxes.
• 1:02
  Speaker 2: As we know, april 15th is always a brutal day to get through, but hope you and yours was able to be able to get through it.
• 1:09
  Speaker 2: And as we talk about money matters with Greg here, as the show is really anything to do with money, so we know that obviously, with tax day and how things have gone recently and the future of taxation, we'll see about all the permanent tax cuts and if they get instituted here in the future.
• 1:31
  Speaker 2: But just letting you know that we feel for you and hopefully you were able to minimize your taxes and get everything filed the way you needed to.
• 1:42
  Speaker 2: We are financial advisors and run a wealth management firm here in Valparaiso.
• 1:47
  Speaker 2: It's a wonderful little town that we have here and we work with clients and ultra high net worth and high net worth individuals and families throughout the nation, as we typically talk about on this show, which is broadcast on WVOP 103.1 FM as well as anywhere you pod, spotify, apple you name it YouTube podcast as well, and then we do a video as well on our YouTube channel, so I hope you're able to check it out.
• 2:22
  Speaker 2: We typically talk about money and how it weaves in and out of your life and how we can help out to add some value to your days of investing and savings across the board.
• 2:36
  Speaker 2: Our broker dealer is LPL Financial.
• 2:40
  Speaker 2: It's the largest independent financial broker dealer, one of the largest independent broker dealers out there, and of course they are a compliance department.
• 2:50
  Speaker 2: So I would be remiss if I didn't mention that the opinions voiced in this podcast are for general information only and not intended to provide specific advice or recommendations for any individual.
• 3:02
  Speaker 2: To determine which strategies or investments may suit you, consult the appropriate qualified professional before deciding.
• 3:09
  Speaker 2: So, with that being said, I'd like to kind of go into what happened last week.
• 3:13
  Speaker 2: It was crazy, it was nuts.
• 3:17
  Speaker 2: It was one of the most volatile since World War II, with the tax cuts coming in on April 2nd and the historic two-day move that was April 3rd and April 4th, which is last Thursday and last Friday.
• 3:35
  Speaker 2: The S&P dropped 1.6% on Tuesday, april 8th and then surged again on April 9th 9.5% on Wednesday April 9th.
• 3:48
  Speaker 2: It's the biggest day up day since 1950.
• 3:52
  Speaker 2: And then fell 3.5 points on Thursday, april 10th, and then jumped another 1.8% on Friday and the S&P ended up nearly 6% for the week, which is quite a ride.
• 4:09
  Speaker 2: We talk about roller coasters in this world and in the investment world and certainly it was just that Wanted to talk about that the markets, the effects of the market and everything else.
• 4:24
  Speaker 2: But I also wanted to mention just quickly I was very honored and lucky to be a part of Indiana University Kelly Business School's CFP Wealth Management Program.
• 4:38
  Speaker 2: Yesterday I was able to speak to a great class that gave me great confidence that the world is in good hands.
• 4:47
  Speaker 2: They have 130 people in the program now.
• 4:52
  Speaker 2: In the CFP program there there's probably about 50 or 60 students, all in suits, all in business suits, a number of different nationalities, ethnicities Just a phenomenal, extremely intelligent group, and I was lucky enough to speak to them and I just wanted to put out a shout out and a thanks to everyone there that day.
• 5:21
  Speaker 2: It just was really, really rewarding warning and I want to thank everyone.
• 5:27
  Speaker 2: I'm looking forward to helping out as many of those kids as we can as far as mentorship and some of the things that I know we can help with.
• 5:33
  Speaker 2: That being said, what about the wild week?
• 5:36
  Speaker 2: Let's go back to that.
• 5:37
  Speaker 2: A roller coaster is not a technical term, but it is probably the best adjective to describe the price actions for, certainly for the week.
• 5:47
  Speaker 2: So the S&P has swung from a low of 4835 to a high of 5481.
• 5:55
  Speaker 2: And that is a 10% intra-week trading range that rivals the sharp price swings of back to March 2020 when we had to trade through a pandemic.
• 6:05
  Speaker 2: So in talking to clients and talking to friends and everything else and looking for, you know, anyone to get asking for advice from us, you know it's in my career.
• 6:17
  Speaker 2: When I first started at the exchange of the Chicago Board Options Exchange and trading in the options pits, I had to trade through a pharma crash.
• 6:30
  Speaker 2: My first pit that I traded in was Merck.
• 6:35
  Speaker 2: I traded the stock Merck.
• 6:37
  Speaker 2: The name of the pit was basically the largest stock that drove.
• 6:42
  Speaker 2: That pit was the name of the pit.
• 6:45
  Speaker 2: So you had the Chrysler pit, you had the American online pit, you had the Amazon pit, you name it.
• 6:49
  Speaker 2: So I traded Merck.
• 6:51
  Speaker 2: And this is back when the administration was attacking pharma and basically telling pharmaceutical companies that they were bad and it kept on dropping every day.
• 7:00
  Speaker 2: So I was going through that as a very novel novice rookie trader.
• 7:05
  Speaker 2: Then I had a devaluation of peso with uno banco de brazil.
• 7:09
  Speaker 2: That um had to navigate that.
• 7:13
  Speaker 2: I had the dot-com boom, dot-com bust up down, crazy moves every single day, a number of elections for sure.
• 7:25
  Speaker 2: I had to trade through, ultimately traded through the Great Recession and decided to start a financial advising business right in the middle of that.
• 7:36
  Speaker 2: That was a great idea and start the firm Ferro Wealth.
• 7:40
  Speaker 2: That is today.
• 7:41
  Speaker 2: But lived through that and then got through a pandemic.
• 7:46
  Speaker 2: Oh yeah, got to say nobody's ever traded through a pandemic in the history of investing.
• 7:54
  Speaker 2: We didn't even know what that was, so that was new.
• 7:58
  Speaker 2: And then now we have a trade war.
• 8:00
  Speaker 2: So it's great.
• 8:03
  Speaker 2: It's just been super easy to be an advisor in these environments and trying to help people navigate these waters.
• 8:12
  Speaker 2: And you know, last week was up and down 10%.
• 8:17
  Speaker 2: I mean you literally have a retracement down at the bottom and a retracement up to the top or a move to the top and really, as the market sort of like, resumes its decline, this area is kind of key for any technicians looking at this, trying to figure out where, uh, if we hold um, these spots?
• 8:39
  Speaker 2: Um, we are.
• 8:42
  Speaker 2: The good news is we are seeing signs of capitulation, which is a magical world word in our world, which means that, um, people are freaking out and so usually when that means is the volatility index, chicago board of volatility, so cboe volatility index or the vix, uh spikes from you know a real relative range of, let's say, you know, 20, 22.
• 9:13
  Speaker 2: It was just at 14.
• 9:14
  Speaker 2: Um, and it goes up to 30 during stress 28, 30.
• 9:20
  Speaker 2: It literally went to 60 last week, which is crazy.
• 9:24
  Speaker 2: Haven't seen that since the pandemic and bearish signs of put options being bought, hedges on stocks, calls being sold, lots of different hedging and just extremely, extremely negative.
• 9:42
  Speaker 2: Now, that being said, we've really seen a lot of that all settle just recently and just in the past few days, even though we're retracing a little today.
• 9:57
  Speaker 2: We were up yesterday morning and we're really seeing sort of today.
• 10:01
  Speaker 2: We were up yesterday morning and we're really seeing sort of the technical process in the market, kind of heal itself, which is very, very healthy.
• 10:08
  Speaker 2: This is a body that's had surgery that has been severe, it's been through trauma and it needs repair and time to repair itself.
• 10:21
  Speaker 2: So with that recovery, we're really going to watch for a shift in multiple things that can get going.
• 10:29
  Speaker 2: Um, so if you were to make, continue with the analogy as far as health goes.
• 10:35
  Speaker 2: But we need to breathe again, we need to get the heart moving again, we need to get up and moving as far as rehabilitation, and not sit on the couch and wait for things to get better.
• 10:50
  Speaker 2: So that's coming, that's definitely improving and we will see as we figure this out.
• 10:59
  Speaker 2: It literally changes every single day and in the last five or six days there's definitely been a massive apathy for don't really want to hear tariffs.
• 11:10
  Speaker 2: Don't want to really hear about tariffs.
• 11:12
  Speaker 2: I'm done hearing about tariffs and you know the market's kind of tired of it and they're just figuring it out because they really haven't changed in the last four or five days, even though they did there for a bunch of times every single day or every single hour.
• 11:27
  Speaker 2: So once the market knows what the rules are and how to play and most businesses do this as well, for sure they know how to fix themselves and then figure out okay, look, that's the game plan.
• 11:42
  Speaker 2: Now we know what to do, this is what our plan is, and good companies will succeed and will be very, very positive down the line.
• 11:56
  Speaker 2: Again, it is healthy to have a retracement for a bull market.
• 12:01
  Speaker 2: I fully think that we still are in a bull market, even though with a 10% retracement it looks like we went into a bear market, but there are some really good things to be able to be seen as far as that goes.
• 12:17
  Speaker 2: The one thing I worry about is earnings.
• 12:19
  Speaker 2: So banks kicked off earnings last week, and you know just about everyone else.
• 12:28
  Speaker 2: You know.
• 12:29
  Speaker 2: Really we were thinking kind of two things.
• 12:31
  Speaker 2: First was the numbers won't matter because the tariff headlines will dominate and it is what it is.
• 12:36
  Speaker 2: And then second, um companies have so little visibility that they will give this sort of this vague guidance, that um, or give any guidance at all, because they're like I don't know what the environment looks like, because this is all new.
• 12:53
  Speaker 2: We've never traded through a trade war, we've never done business through a trade war, so how are we supposed to know?
• 13:00
  Speaker 2: So they basically just say you know, it is what it is, and the good companies step up and try to at least figure out something and give you some sort of guidance.
• 13:06
  Speaker 2: But the expected earnings growth numbers for the first quarter really is going to be.
• 13:13
  Speaker 2: You know, they still have to be published and I go back to the third and the fourth quarter last year to really talk about.
• 13:21
  Speaker 2: You know how we're kind of hesitant because things did soften.
• 13:24
  Speaker 2: They softened well before Trump got in and certainly you know that was inherited.
• 13:30
  Speaker 2: There was a lot of, I would say.
• 13:33
  Speaker 2: You know there's a lot of government spending and there's a lot of government employment.
• 13:37
  Speaker 2: That was certainly propping up numbers, as we find out now that really affected GDP and have affected overall numbers.
• 13:49
  Speaker 2: As far as the economy here has the companies kind of figured out, you really have to sort through what companies are saying and how they're affected because they don't necessarily know as well.
• 14:05
  Speaker 2: So a lot of really uncertain certainty.
• 14:09
  Speaker 2: I think we did a podcast John Farrell and I, my brother and I did a podcast about.
• 14:15
  Speaker 2: We were, we were certain about things being uncertain and April 2nd certainly made that happen.
• 14:23
  Speaker 2: So what are we talking about?
• 14:25
  Speaker 2: As far as our year-end target, look, I'm still saying that we're going to be, you know, our latest range.
• 14:31
  Speaker 2: We're going to be up in 6,200s from where we are today.
• 14:35
  Speaker 2: We're right around 5,300 or so in the S&P 500.
• 14:39
  Speaker 2: Still positive as far as this all goes, even though there's going to be a drag on earnings and even though the tariffs are going to be concerning for multiple different places, it's not so much for others and they're going to benefit really well.
• 14:54
  Speaker 2: I mean, if you are in the wheelhouse of American made and American done already, you're already seeing companies take advantage of that.
• 15:02
  Speaker 2: Their advertising campaigns have already seen, you know, come about.
• 15:06
  Speaker 2: I mean, it was just, I mean it was just what 14 days ago that this all happened.
• 15:11
  Speaker 2: So it's interesting to see how fast companies are taking advantage of the fact that, if they are American made and American assembled, that um, they're confident that they will benefit.
• 15:25
  Speaker 2: Um, that being said, with earnings and going through earnings as far as the uncertainty valuations really aren't all that compelling, we're getting a small premium to kind of take risk associated with us equities, but it's still not great.
• 15:48
  Speaker 2: There is some value out there.
• 15:50
  Speaker 2: There are some stock picks to pick, but it's going not great.
• 15:52
  Speaker 2: You know there is some value out there, there are some stock picks to pick, but you know it's going to be really tough.
• 15:54
  Speaker 2: We always used to say in the trading world, in the pits, you know when do I buy or when do I cover, and it's kind of like catching a falling knife.
• 16:06
  Speaker 2: If you grab it, you're going to grab it somewhere.
• 16:09
  Speaker 2: You're going to get bloodied and it might you know it might drop lower.
• 16:14
  Speaker 2: But back to all the rules that we talk about and what our investment committee talks about, and what I try to help people out every day when they ask questions about all this, is you have your good names, you have your good companies, you're confident that those companies are going to be just fine, you know?
• 16:32
  Speaker 2: And you're looking to shop at a discount.
• 16:34
  Speaker 2: I mean, I don't like walking into Neiman Marcus and paying full price Nobody does and not even looking to see what's on sale.
• 16:42
  Speaker 2: So, look to see what's on sale, see if any of those names are compelling, do your research and, you know, invest wisely, invest prudently.
• 16:55
  Speaker 2: So, as far as the volatility goes, we've had some huge drawdowns.
• 16:58
  Speaker 2: I don't necessarily see that changing.
• 17:00
  Speaker 2: We don't necessarily see that changing.
• 17:02
  Speaker 2: Um, you know, in the near future we're seeing um.
• 17:06
  Speaker 2: You know we need some to to repair the body of the market.
• 17:11
  Speaker 2: Right now.
• 17:12
  Speaker 2: We need some, just some small updates.
• 17:14
  Speaker 2: We don't need this up 9% in a day type crap.
• 17:18
  Speaker 2: We just need some really nice, solid, healthy days of up 0.2, up 0.3, up 0.4, whatever it might be.
• 17:27
  Speaker 2: So.
• 17:28
  Speaker 2: Since the recent bottom of 48.35 last Monday, that washout and sort of in conclusion here, that washout, that fear-driven, that waterfall decline was certainly abundant.
• 17:43
  Speaker 2: And then, following that sharp rally off the lows on Wednesday, when President Trump put a pause on high tariff rates, the risk-reward trade-off just doesn't look all that compelling right now.
• 17:58
  Speaker 2: So several things are giving us a pause for sure, including the intensity of the trade war with China We'll see how that all goes the uncertainty about non-China tariffs and how those will land.
• 18:13
  Speaker 2: We see those and there's definitely, you know, boxing gloves on with two massive economies.
• 18:22
  Speaker 2: And then, you know, we'll see.
• 18:25
  Speaker 2: We'll see if we retest lows, but we're definitely now seeing a range here that's going to be kind of stuck.
• 18:34
  Speaker 2: So plugging along, picking and choosing, investing wisely, picking your spots, and then ultimately, you know, for the long term, there's opportunity.
• 18:46
  Speaker 2: Here, you know you really have to make sure that you are being very, very patient If you're looking for conservative places to go.
• 18:55
  Speaker 2: I mean there are, you know.
• 18:57
  Speaker 2: When you look at the treasuries, where they're paying you know 4% or wherever they are now, those are certainly, you know, encouraging signs that yields have not cracked.
• 19:07
  Speaker 2: So that's, you know, hanging in there.
• 19:10
  Speaker 2: We'll see how that all goes, but for now, you know, invest wisely, be calm, be patient and, you know, hang in there.
• 19:22
  Speaker 2: We're all in this together and it has been a crazy April.
• 19:27
  Speaker 2: So, that being said, the show's money matters for Greg.
• 19:32
  Speaker 2: Greg Farrell, ceo and President of Farrell Wealth and Wealth Management Company here in Valpo, and we're broadcasting on WVLP 103.1 FM locally, and then also podcasting anywhere.
• 19:46
  Speaker 2: You pod Spotify and Apple and you name it where we are.
• 19:52
  Speaker 2: If you need anything, you have any questions about what we do, just email me at greg at farrellwealthcom.
• 19:58
  Speaker 2: It's like Will Ferrell as far as pronunciation, but he spells it wrong.
• 20:04
  Speaker 2: It's F-A-R-R-A-L-L-W-E-A-L-T-Hcom.
• 20:06
  Speaker 2: That's F-A-R-R-A-L-L-W-E-A-L-T-Hcom.
• 20:08
  Speaker 2: That's F-A-R-R-A-L-L-W-E-A-L-T-Hcom.
• 20:13
  Speaker 2: So, greg, at Farrell Wealth, you can also find us on any of our socials on Instagram, linkedin, facebook and X as well.
• 20:24
  Speaker 2: So reach out to me.
• 20:26
  Speaker 2: Love to hear from you and I'd love to have some questions.
• 20:28
  Speaker 2: If you have any questions that you want to be able to talk about.
• 20:33
  Speaker 2: Next couple weeks, we're going to sort of try to pivot away from the market talk if we can.
• 20:38
  Speaker 2: It has definitely absorbed us here in the last month or so.
• 20:45
  Speaker 2: Without a doubt.
• 20:46
  Speaker 2: We're hoping that we get you get a chance to get you some other things to talk about that can help you with your wealth and help you with increasing your wealth on a daily basis.
• 21:02
  Speaker 2: So we'll be bringing that to you too.
• 21:04
  Speaker 2: We also have a number of guests we're trying to bring to you as well.
• 21:08
  Speaker 2: But thanks again for listening and being a part of this.
• 21:11
  Speaker 2: Carry on, carry on, be patient and invest wisely, as we always say.
• 21:20
  Speaker 2: Thanks again, we'll see you later.
• 21:25
  Speaker 1: Thanks for tuning in to Money Matters with Greg.
• 21:27
  Speaker 1: We hope you gained some valuable insights today.
• 21:29
  Speaker 1: Remember, your financial journey is personal, but you don't have to go it alone.
• 21:34
  Speaker 1: If you enjoyed the show, be sure to subscribe and share Until next time.
• 21:38
  Speaker 1: Here's to making your money work for you.
• 21:41
  Speaker 1: Securities and investment advisory services offered through LPL Financial, a registered investment advisor, member FINRA, sipc.