Money Life with Chuck Jaffe

Laurence Kotlikoff, professor of economics at Boston University and the founder of Maxifi.com — which helps investors bring economics into their financial planning decisions — says investors who have spent decades thinking the stock market rebounds from every dip and decline could be in for a different story with a coming recession, and he thinks they should be trying to lock in their standard of living rather than focusing on historic rates of return. To that end, he says he has cut his personal equity exposure from 60 percent of the portfolio to 20-25 percent. "I do see only downside risk from what's going on," Kotlikoff says. "Even if there is nothing changed on average, the uncertainty itself is enough to produce a recession and a big drop in the stock market." Ted Rossman discusses a recent Bankrate.com survey which showed that more than half of Americans say they will spend less on discretionary items like travel, dining out and live entertainment, but he also notes how plans to limit spending often fail to translate into action and reality. Plus, Chuck answers a listener's question about how to turn the portfolio of his younger self into something more age appropriate and mature.

John Petrides, portfolio manager at Tocqueville Asset Management, says that today's heightened volatility should have investors spreading their bets, "because the world is so unsettled right now that it's hard to have conviction to lean into one position, one asset class or one investment all on one side of the boat at one time." He says the market has ridden out a storm but isn't settled, and investors will want to extend their international investments to get good values, but will want to capitalize on premiums currently available in bonds, will want to diversify geopolitical risk with gold and will want to be selective on domestic stocks as they watch the tariff and economic situations play out. Plus journalist Sara Bongiorni, who wrote a book in 2007 called “A Year Without Made in China,” which chronicled her efforts to simply avoid goods made in China for 12 months, discusses how hard she thinks it will be for Americans to minimize the impact of tariff policies, noting that certain industries — from shoes to lamps to the materials needed to celebrate July 4 — are virtually impossible to buy from any place but China, and she notes that the efforts it takes to avoid Chinese goods also can be extreme, leaving consumers with no easy alternatives.

Jack Janasiewicz, senior vice president and portfolio strategist at Natixis Investment Managers, says the market is in the middle of "one big range trade, and we're probably a lot closer to being at the top of the range rather than the bottom," which means there is more likely room to move down from here rather than to post big gains. Janasiewicz says the the slowing economy needs more time to work through the hard data, which will take time, and will likely lead to a volatile market within the current range. Janasiewicz says the market must also deal with short-term concerns over the weakening dollar, but says he think those worries are overblown when it comes to their long-term impact; like most analysts right now, he likes gold as a dollar diversifier to help ride out the issues. Brian Griggs, head of portfolio strategy and solutions at Nuveen, says that investors have long had too much dependence on large-cap domestic stocks and an over-reliance on duration in fixed-income allocations, which is leading to painful portfolio moves caused by today's stressed stock and bond markets. He talks about making small-but-appropriate portfolio tweaks to lower portfolio volatility and diversify portfolios to improve their investment return and comfort level. Plus we revisit a recent question that Chuck answered from a listener who must decide which investments they will sell in order to raise some cash to pay for one-time additional expenses.

Steve Sosnick, chief strategist at Interactive Brokers, says that investors appear divorced from fundamentals, buying dips, chasing rallies and generally hoping for a lot of things to go right as the market climbs "a huge wall of worry" and mostly ignores that earnings growth forecasts of 12 percent entering the year are now being predicted at about 7 percent. Sosnick expects interest rate cuts later this year, but notes that they will be made from a position of economic weakness, and he also thinks the stock market is much more likely to re-test its April lows — right after tariff policies were announced — than to set new record highs, noting that just the conditions that are clear and aren't muddled by uncertainty should make investors think "Buckle in for volatility." Just over a month after making an actively managed commodities fund the ETF of the Week, Todd Rosenbluth head of research at VettaFi, turns his focus back to commodities, this time highlighting an index-based option from Aberdeen Investments. Plus Chuck answers a listener's question about investing in private credit and why he has repeatedly questioned experts about the potential for trouble in that emerging investment arena, which those money managers routinely have downplayed in their answers.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, says that investors watching headlines about the economy, the weakening dollar and more need to realize that policy shifts and global changes play out over long stretches of time, so that investors should react in small, modest ways. For Zaccarelli, that has included adding gold to the portfolio as a dollar diversifier and reducing risk while waiting to see how the economy unfolds and creates chances to be opportunistic buyers in areas like small-cap stocks and more. Rachel Perez discusses a survey done by Secure Data Recovery which looks at Americans' obsession with tracking their data — from hours sleeping to weight to all things financial — which found that 70 percent of the Americans who track their spending (and nearly two-thirds of those who track savings) say that watching and analyzing the numbers makes them anxious. Plus retired economics teacher David Mayer discusses his new book, "Economics in Plain English," and why in challenging times there seems to be trouble coming up with standard definitions for common terms like "tariff."

Karl Mills, partner at Cerity Partners, says investors have survived all kinds of events that seem as bad or worse than anything they are facing now, which is a reason to "stay along for the ride," even if that means moving to the slow lane — where he is positioned now — and being moderately defensive. Mills says he looks at current events "like friction," in that the "don't  prevent things from happen, but they make it harder for things to happen" by slowing growth, raising prices and cutting into sales, which will dampen market results while they play out. Mills notes that domestic market valuations remain high, international markets are priced more attractively and also benefit from the low expectations investors have of how foreign investments will turn out amid ongoing tariff questions.George Bory, chief investment strategist for fixed income at Allspring Global Investments, discusses the potential short- and long-term outcomes resulting from last Friday's downgrade of the United States' credit rating by Moody's. While the downgrade implies that the U.S. is a bigger credit risk than it seemed — which could make some investors expect higher interest payments to buy government bonds — Bory notes that this move was largely expected and is more a warning of potential future problems than a concern for current fixed-income investors. Plus, Tim Koller, co-author, "Valuation: Measuring and Managing the Value of Companies" discusses how current conditions — much like Covid times — are changing long-term business-valuation prospects for companies.

Fritz Folts, chief investment strategist at 3Edge Asset Management. says the uncertainty about tariff policy — which has pushed uncertainty over interest-rate and monetary policies nearly out of sight — has made it particularly hard for investors to decide where to go with their money now. While the hard economic data is good, Folts notes that the concern is how quickly it may change once tariff chaos hits consumer prices; the result is that he's splitting his equity assets 50-50 between domestic and international stocks, and is looking at short-duration bonds and gold  to hedge the stock exposure. Selma Hepp, chief economist at Cotality, discusses the latest National Association for Business Economics Business Conditions Survey, released today, which shows that economists' share Folts' concern about the coming months, with 75 percent of the survey respondents putting the probability of a recession in the next year at 25 percent. Just 15 percent of economists were that strong on recession chances in January. Plus David Trainer, president of New Constructs, puts a digital payment technology company in the Danger Zone for the third time, and Daryl Fairweather, chief economist at Redfin, discusses her new book, “Hate the Game: Economic Cheat Codes for Life, Love and Work.”

James St. Aubin, chief investment officer at Ocean Park Asset Management, says the stock market is pricing solid corporate earnings and generally strong economic growth momentum, but those gains haven't ended the uncertainty around tariff policies. While the market seems to think the impacts will be muted, St. Aubin says we are in a waiting period to see how consumers, markets and economies are truly impacted by tariffs, and the generally positive view leaves more potential downside risk that investors should guard against. Mark Gatto, co-chief executive officer at CION Investment Group, discusses how private markets have been reacting to the policy turmoil and how they have been steadier and less volatile than public markets amid the broad market swings caused by current events. Plus Adam Bierman, a founder of MedMen — one of the earliest public entrants into the marijuana business — discusses his book "Weed Empire: How I Battled Gangsters, Investment Banks, and the Department of Justice to Build the Cannabis Industry in America."

Andrew Foster, chief investment officer at Seafarer Capital Partners — manager of the Seafarer Overseas Growth Fund — says emerging markets are poised to thrive in an environment where the dollar is weakening against not only foreign currencies but gold, Bitcoin and "a bag of Doritos." Foster says that the fundamentals are improving for emerging markets, which are showing the potential for a second consecutive year of 12 percent growth in earnings despite tariff and trade concerns. He says stronger stock profits combined with currencies getting stronger against the dollar is "a good setup" for investors looking to diversify a portfolio. Todd Rosenbluth, head of research at VettaFi, also talks international investing, going abroad — though to developed markets rather than emerging markets — with his pick for the ETF of the Week. Plus, Chuck talks about how investors might want to adjust portfolio fits — and follow the advice from recent guests — now that the market has bounced back and crossed into positive territory for the year, reversing the big drops that occurred when tariff policies were first announced.

George Milling-Stanley, chief gold strategist at State Street Global Advisors, says he expects gold to trade between $3,100 and $3,500 for the remainder of the year, but is making the bullish case for new record price levels as high as $3,900 an ounce, noting that he believes the new bottom level for gold is $3,000 an ounce, up by $1,000 in the last year. Milling-Stanley says gold has been working well as a geo-political hedge, providing ballast to portfolios that have been whipsawed by current economic policies, but he acknowledges that gold has not done a great job in its traditional role as a counter-weight to inflation, because inflation levels have not been high enough for long enough for gold to deliver in that role. Kristy Akullian, head of iShares investment strategy for the Americas at BlackRock, says that Tuesday's consumer price index numbers didn't show the impact of tariff-related price increases, but those could impact the numbers as soon as next month; meanwhile, the current CPI print should encourage the Federal Reserve to stand pat on interest rates and might encourage investors to make a small move up the risk spectrum, focusing on quality and low-volatility investment factors rather than simply looking to minimize volatility. Plus Kerry Sette discusses the latest consumer research out from Voya Financial, which showed that more than one in three working Americans say that the current economic uncertainty and the potential for higher prices caused by tariff policies is severely impacting their ability to save for retirement.