Excess Returns
The Secular Bull Market Isn't Dead: Jim Paulsen on Why Tariffs Won't Break It
Apr 9, 2025
Jim Paulsen, Chief Investment Strategist at Paulsen Perspectives, shares his decades of expertise on navigating turbulent markets. He discusses how tariffs may not be as inflationary as believed and suggests a weaker dollar could enhance trade competitiveness. Paulsen critiques Federal Reserve policies for their inaction amid deflation risks and emphasizes the importance of emotional discipline for investors. He highlights the resilience of the private sector and offers practical investment strategies, focusing on long-term thinking amidst current market volatility.
01:02:49
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Quick takeaways
- Tariffs, often mistaken for inflationary tools, actually act as a contractionary force, weakening economic competitiveness instead of enhancing it.
- Investor psychology during turbulent markets can lead to poor decisions; maintaining emotional discipline and a long-term perspective is crucial for success.
Deep dives
The Misconception of Tariffs and Inflation
Tariffs are often wrongly viewed as a cause of inflation, but they actually act as a contractionary force on the economy. Implementing a tariff effectively imposes a tax on foreign goods, and according to economic theory, this could weaken, rather than strengthen, a country’s economic position. Instead of increasing competitiveness through tariffs, a better strategy would be to decrease the dollar's value to help make U.S. products more appealing internationally. Current views on tariffs often overlook their potential detrimental effect, particularly when seen against the backdrop of broader economic policies already contributing to a slowdown.
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