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Sam Dickie: Fisher Funds expert reveals how to make investments in a volatile world · Best of Business

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  Speaker 1: You're listening to a podcast from news Talk SEDB follow
• 0:12
  Speaker 1: this and our wide range of podcasts now on iHeartRadio
• 0:16
  Speaker 1: Brian Bridge.
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  Speaker 2: That would of course involve you taking financial advice from
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  Speaker 2: Donald Trump. Now we're going to get some from Sam
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  Speaker 2: Dickey Fisher Funds, who's been watching this all day. Sam,
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  Speaker 2: good evening, Good evening. Write no advice, but some perspective, yeaps. Yeah,
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  Speaker 2: I should tend for myself. Sorry. Now we've obviously been
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  Speaker 2: inundated by the newsflow. How do you keep track of
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  Speaker 2: it all and decide what's important what's not?
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  Speaker 3: Yeah, whipsaw. You really do need frameworks and roadmaps. Otherwise
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  Speaker 3: you are just drowning in headline bombs and you are
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  Speaker 3: getting whip swords. So we think about three or four
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  Speaker 3: broad framework so geopolitical, economic, equity, market and single stop frameworks.
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  Speaker 3: So when we think about geopolitics, we keep it super
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  Speaker 3: simple because we're not experts, but we bucket the players
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  Speaker 3: into the retaliators. So that's Europe, Canada, Mexico, and then
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  Speaker 3: the negotiators so importantly Japan and the Southeast Asia and
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  Speaker 3: most other countries, then of course China. So when you
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  Speaker 3: think about the retaliators prior to the pors. I mean Europe,
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  Speaker 3: it's probably a level playing field when it comes to
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  Speaker 3: negotiating with the US, and I think Canada and Mexico
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  Speaker 3: were critical crash test dummies, so the US dealt with
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  Speaker 3: them in the week's leading up to Liberation Day, and
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  Speaker 3: positively there was no incremental or reciprocal tariffs on top
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  Speaker 3: of the initial ones. I think the negotiators being led
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  Speaker 3: by Japan is really reimportant, and China it's increasingly looking
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  Speaker 3: like they will be the key focus of Trump's second
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  Speaker 3: term like they were in his first. So clearly any
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  Speaker 3: movement forwards or backwards with those three packets as key.
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  Speaker 3: On the economic side, on growth, most economists think there'll
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  Speaker 3: be one percent of hit the global growth. On inflation,
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  Speaker 3: we'll see a second half spike of about one and
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  Speaker 3: a half percent in US inflation. But critically ryan the
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  Speaker 3: market is or was telling us about nine hours ago
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  Speaker 3: that the medium term growth drag from these crazy policies
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  Speaker 3: will outwig the short term inflation spike. And we know
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  Speaker 3: that because the marketed priced in another rate cut by
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  Speaker 3: the Fed since Liberation Day. And then the final thing
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  Speaker 3: on economics is the mitigant So before we talk about
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  Speaker 3: Trump's pain threshold, which we've discovered overnight. The first mitigant
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  Speaker 3: is easier marchary policy by the Fed and the ECB,
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  Speaker 3: and the second one is easier fiscal policy. So in
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  Speaker 3: the US we could get more tax cuts, we could
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  Speaker 3: see doze backing off, and in Europe places like Germany
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  Speaker 3: are ramping up infrastructure spending.
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  Speaker 2: So where two from here, I think.
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  Speaker 3: We're two from here, what is his the endgame? Where
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  Speaker 3: does he blink? What's his paying threshold? So we found
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  Speaker 3: that out last night, and I think he was prepared
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  Speaker 3: to see more equity market pay And that's become pretty clear.
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  Speaker 3: That's a sort of a self correcting mechanism. It doesn't
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  Speaker 3: feed on itself, but the sort of self reinforcing asset
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  Speaker 3: prices that do feed on themselves, like credit. He did
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  Speaker 3: sort of score an own goal there. So he saw
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  Speaker 3: spiking the spiking costs of corporate borrowing the US. So
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  Speaker 3: that had been that's the spread you pay over government
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  Speaker 3: bonds to borrow as a risky corporate, and that had
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  Speaker 3: been at sort of fifteen year lows a few weeks ago,
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  Speaker 3: and as of sort of eighteen hours ago, it had
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  Speaker 3: spiked to some of the worst level scenes in twenty
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  Speaker 3: twenty two, So that has a direct transmission mechanism to
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  Speaker 3: the average person on the street via borrowing rates. And
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  Speaker 3: then we also saw him starting to lose control of
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  Speaker 3: the government bond market about sort of sixteen hours ago,
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  Speaker 3: and you saw sort of thirty year government bond yield spiking,
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  Speaker 3: and that's quite scary, someone calling it his Liz Trust moment.
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  Speaker 3: I think those two sort of self reinforcing things caused
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  Speaker 3: him to pause. So the point here is, I think
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  Speaker 3: if we see any further escalation in China or him
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  Speaker 3: flip flopping on the pause with other countries, that will
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  Speaker 3: be carefully checked against. Those are the resultant moves in
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  Speaker 3: the price of US credit, the price of US government bond,
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  Speaker 3: And if they spike again, it seems you will back down.
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  Speaker 2: Is it hard? I mean, is this more difficult to
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  Speaker 2: predict than COVID Donald Trump's mind because you're not really
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  Speaker 2: you know, you're not really. It doesn't behave in a
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  Speaker 2: rational way. Not nor did a virus mind you, but
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  Speaker 2: it doesn't behave in a rational way. I mean, I
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  Speaker 2: suppose it has, as you say, blinked today, we've we've
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  Speaker 2: figured out the pain threshold. But it's very it must
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  Speaker 2: be very hard to get to have irrational thoughts on
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  Speaker 2: it is.
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  Speaker 3: I mean, it is sort of similar to COVID in
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  Speaker 3: the early days, and we just didn't know how serious
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  Speaker 3: this this virus was going to be and how it
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  Speaker 3: was going to sort of morph from one virulent strange
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  Speaker 3: to another. But it's quite apt, actually apt apt comparison, Ryan,
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  Speaker 3: But I think that that's I mean, all these things
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  Speaker 3: are the same and the respect that we don't know,
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  Speaker 3: and that's the point. They're hard to precisely price or
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  Speaker 3: or understand or even keep up with. That's why if
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  Speaker 3: you don't want to drown in these headline bombs, you
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  Speaker 3: have to have these sort of simple frameworks to think
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  Speaker 3: about things. And the other thing is your own portfolio. Ryan.
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  Speaker 3: You put it into four buckets, so companies directly impacted
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  Speaker 3: by US tariffs, companies directly impacted by retaliatory tariffs, and
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  Speaker 3: then how those companies are relatively positioned within their sector
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  Speaker 3: so that do they have a manufacturing advantage, do they
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  Speaker 3: have pricing powers so they can pass on any cost increases?
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  Speaker 3: And the final bucket is companies in the way of
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  Speaker 3: a probable economic slowdown. So that's the sort of four
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  Speaker 3: buckets you think about any investment you're making. And as
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  Speaker 3: of twenty four hours ago, every bucket, so the directly impacted,
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  Speaker 3: the indirectly impacted, and even the supposedly not impacted hand
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  Speaker 3: be indiscriminately over sold. So that was pretty good buying.
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  Speaker 3: But now we're in a more sort of picky environment.
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  Speaker 2: Yeah, so what do we do now? I mean, have
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  Speaker 2: we missed our opportunity to make a bunch of money?
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  Speaker 3: I mean, look, when when fear gets as elevated as
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  Speaker 3: it was sort of again twenty four hours ago. You know,
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  Speaker 3: sentiment gauges are a a good barometer, and you know
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  Speaker 3: we were deeply in fear to their territory. Some of
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  Speaker 3: the fear gauges we track with the worse they've been
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  Speaker 3: in twenty five years. I do think there's when there's
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  Speaker 3: blood on the streets, there's opportunity around. That of course
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  Speaker 3: doesn't mean as a long term investor that the opportunity's gone.
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  Speaker 3: It just means you need to be a bit more picky.
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  Speaker 3: And I do think, as always, companies with wide and
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  Speaker 3: widening economic moats around their businesses long growth runways run
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  Speaker 3: by high quality people are a pretty good place to start.
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  Speaker 2: Sam. Appreciate your time, Sam Dicky Fisher funds.
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