Volatility is Back! (Uncut) 02-22-2025

Volatility is Back! | Market Recap | ft. Peter Boockvar & Scott Schwartz | Rise UP!

when you have a high multiple stock you have no room for error and Walmart came into this earnings report trading at 38 times earnings so when they guide to a revenue growth of three to 4% but the street is expecting four while that’s essentially in line no room for error the Stock’s going to pull back Costco to use that as another example they don’t report earnings but the stock is trading at 58 times earnings palente here trading at think triple digit earnings multiple so I think it was sort of a

rethink of wow there’s some very high multiple momentum stocks uh let me just sort of take some money off the table and I think that sort of spread into other parts of the market and hence the selloff [Applause] hi everybody and welcome to rise up uh I’m Joe Duran I’m one of the co-hosts unfortunately my Intrepid partner Terry is not here today she’s on a flight so we’re going to miss her a lot we’re gonna obviously miss her brilliant insights but I do have two amazing guests with us today we have uh Peter

bvar the chief investment officer of Bleckley a brilliant mind on how to navigate the markets and Scott Schwarz uh a charted a certified financial planner and somebody who works with clients all over the country helping them understand how to apply planning principles to make good decisions about their financial lives J want thank you so much for joining me uh we’re going to miss obviously Terry’s wonderful takes on the world especially given her uh being the chair of the cfp board but gentlemen thank you for joining

us hi Joe good to see you hi Scott good to see you uh Peter obviously we got to start with what’s happened so far this week week started off with a couple of new HIDs on the S&P 500 the da the NASDAQ uh the interest rates reasonably flat and then big pancake obviously uh dat started quite ugly um lots of big stocks like Walmart really hitting the skids had some uh some defense stocks also not doing very well and so would love to get your thoughts obviously the volatility we did get a nice recovery

toward the end of the day but still down around 600 points on the Dow about half a percent on the S&P although we’re down more than 1% at one point today so nice little recovery at the end but how should we think about today obviously volatility spiking a bit um what what drove today’s action do you think well I think the leadin to today’s action which I think helps to explain what happened is while the market went to the highs there really wasn’t like an ump rally to the upside it seems that the Market’s

more of like getting a case of vertigo here uh sort of chopping around but was most interesting about the decline in Walmart and other high multiple stocks was when you have a high multiple stock you have no room for error and Walmart came into this earnings report trading at 38 times earnings so when they guide to a revenue growth of 3 to 4% but the street is expecting four while that’s essentially in line no room for error the Stock’s going to pull back Costco to use that as another example they didn’t

report earnings but the stock is trading at 58 times earnings palente here trading I think triple digit earnings multiple so I think it was sort of a rethink of wow there’s some very high multiple momentum stocks uh let me just sort of take some money off the table and I think that sort of spread into other parts of the market and hence the selloff but again in the context of a market that was just at the highs but I think just some choppiness and some vertigo as I said uh making people a little little afraid of heights up here

it seems I was reading today um quite a bit of concern that if Walmart is a little bit concerned about future earnings about people’s spending ability that it might affect future earnings growth it might affect perhaps a Slowdown in the economy how do you feel about where we are in the economy do you have concerns that we’re headed for a Slowdown even with the uh markets at new highs interest rates are pretty stable but what are your thoughts on where we are on the economic cycle here I I see a

very uneven economy at the headline level growth is about 2 and a half% it sounds great but but most of that growth is being driven by upper income spending anything related to AI spend and anything related to government spending in addition to the government legislative uh incentive programs like the IRA the chips act infrastructure spending if you look at other parts of the economy like housing where the pace of transactions of existing homes is at 30-year lows you manufacturing’s been in a recession for about two years lower to

Middle income spending uh has been somewhat soft and anything Capital spending xai has been soft as well so it’s sort of like a two trck uh economy that we’re experiencing here and Walmart is always a great tell because what’s interesting about Walmart is it’s not just a retailer that caters to lower to middle-income people they have a growing presence in those making above a 100,000 so anybody looking for value and convenience Walmart is the winner so it’s always a a great tell and we do have a follow through next week with a

bunch of other retailers and a varet of different uh consumer product compan you know consumer product areas that’ll be a really good finger on the pulse of the state of the consumer but definitely bated consumer Peter and Scott uh I’d love to bring you in on this Scott it seems to me the government is taking very s seriously with the uh Department of government efficiency reducing our expenses the government’s starting to act like a regular human being who has lived beyond their means and cutting

back but obviously government spending is a big part of the economy and so when they talk about reducing the defense budget by any level of percentage over the next few years or even the reducing the waste firing employees letting them take early retirements all of that will take some gas out of the economy so Scott what’s your perception of what’s Happening Here how should how should an average individual be thinking about this what are the impact for the stock market how do you think it affects the

economy as a whole I’d start by saying that one’s probably a little above my pay grade but I’d love take a whack at it um look I think that anytime you can be more efficient that’s great we’ve all been you know talking our whole lives about how we know that you know the government is a lousy you know Steward of our money anecdotally we’ve been talking since we were little kids about you know $55,000 Hammers and what have you so that’s always been expected it doesn’t have to be that way I think the

upsides of the government getting more in line if we didn’t have these huge debts and deficits I think uh probably help with the inflation situ situation and I think the other scenario is you’re right on the fact that fewer government employees those are people who have jobs and spend money too less money being spent you know throughout the bureaucracy that’s part of GDP but I’m pretty confident that these people who leave the government will find other jobs I think that things that are being done there money that’s being spent

there can be spent elsewhere I think the economy is dynamic enough that maybe in the shortterm we’ll see a little bit of slippage but I think the long term will actually do better so I’m pretty encouraged by it honestly On a related subject there was talk uh Peter that they’re going to potentially give us a efficiency dividend back to American consumers of several thousand I heard $5,000 it seems unimaginable to me like what’s the point of saving on a deficit and then giving people a boost that will

obviously be kind of like the stimulus checks everyone will spend it on a new phone and create a short-term flip do you think it happens I I I don’t I think they’re better off allocating that to getting tax cuts that are expiring this year get them extended you know a one-time check is just a one-time impact I’d rather see a focus on permanently extending those tax cuts which I think that money should be allocated to Scott any additional thoughts on that no I think I think that’s right I think the problem when

you send money out it gets spent and it also you know we should have learned a little something when they were sending that money out during covid all it really did uh was cause you know some unnecessary spending and some inflation it didn’t really help anybody it didn’t change anything so yeah it’s like that second Martini you really don’t need it it feels good at the time and then you regret it afterwards that’s right and all it does is out to the deficit obviously we obviously have a new uh Secretary of Commerce uh I’m going to

check as name because I never remember it Howard letnik he was a finance guy um from Canada Fitzgerald I think he’s quite big on tariffs as well um any thoughts Peter Scott I I think he’s going to be sort of the point man on tariffs he was the one that was tasked to look into the reciprocal tariffs uh you know as Commerce Secretary you’re sort of you know the the the guy who’s overseeing uh economic policy and torist we know right now is a pretty important part of uh of economic policy and which

with respect to that reciprocity you know it’s trying it’s going to try to sort of even out you know the Tariff playing field so if if Europe tariffs a US automobile by 10% and we only put a 2% tariff on their cars coming into us we want to even that out uh in addition to the plan uh on the part of lutnick is to include the European vat taxes that that that they Implement uh so it’s it’s that that’s the goal how it all plays out well have to see they sort of gave themselves through April 1 to try to

figure it out and also the key with the tariffs is are they G are they going to sort of roll the revenue raising of it into extending the tax bill or will this be sort of an isolated uh Focus where again it tries to even out the sort of the the trade playing field I mean reciprocal is very hard right like you can’t say well you’ve got this much on cars we’re going to put that much on cars because they might have a different amount on wine than we have that they have on Whiskey than we do on wine so it’s very fluid it’s very

difficult to calculate exactly what the uh what the amount is you’re meant to tax and what products you’re going to tax but it makes it quite difficult if you’re a corporate citizen if you’re in the making products and you’re trying to figure out what you could charge and I noticed a lot of the car companies really getting hit quite hard just an anticipation of what could happen so how does an investor think about this like how should you think about navigating these tariffs in these rather complex

times well we we are beginning to see some some sort of softening of of confidence in the manufacturing data because of this uncertainty I think if you are a small business you’re a manufacturer you know tariffs are coming but you just want to know where they are because once you know the level of tariffs then you can plan for it and you can move on it’s it’s the the unknown that’s creating some sitting on the hands type Behavior Uh particularly when it comes to Capital spending plans where we’ve seen some surveys where that has

actually softened so let’s just get it out there let’s have business be able to deal with it and move on uh but until then I think there’s going to be some hesitancy so we’re going to shift gears here to our big topic and I think it’s apropo especially although we hadn’t planned it before what ended up happening today is a reminder of where we are in the markets all-time highs some serious volatility starting to kick in even if it’s just for in between a day interest rates still not coming down

and so we’re going to have a session on questions the most frequent questions we get about how to navigate volatility we we tend to be fairly optimistic but we tell people prepare for for tough times so Scott we’re going to start with our first question which came from uh Monica in Atlanta who says how do I know what the right level of risk is in my portfolio if I’m going into a volatile time so financial planning you deal with this every day I know you have this question come up almost I can’t imagine

the many days it doesn’t come up with doing what you do so how should a person think about their risk exposure their risk appetite how what is the difference and how do I think about that when I’m putting a portfolio together you know you and I have talked about this a lot right we all Focus so much on the day-to-day what happened you know the reversal in the market you know from the lows of the morning and a recovery in the afternoon or vice versa the reality is you know when you’re in the financial

planning business like I have been for you know I hate to say it out loud for 40 years you SE we’ve seen a lot um we don’t focus on what happened today right so when we’re looking at which of the volatility look like for a portfolio the first thing I want to manage is I want to manage my client’s liquidity so if you’re if the person ask this question is 20 years from retirement I’m not so worried about it right I want to have a good balanc high quality Equity portfolio I’ve got a 20-year time rise

and whatever happened this afternoon at 3 o’clock I assure you will be worked out over the next 20 years if that person is retired however and they’re drawing money from their portfolio I want to make sure I’ve got enough liquidity available that’s not going to be impacted by the volatility in the market so that at the end of the day we know we’ve got five years of income coming in the door and again whatever’s happening in the market has plenty of time to sort itself out I think this a very important Point here uh Scott the

difference between being a net saver and a net user of your savings people say well you should invest for the long term regardless but the truth is if you’re living on your savings and selling securities in a volatile time your dollar cost averaging down whereas if you’re net saving volatility is your friend so I think one very big takeaway here is it really depends whether you’re in retirement or close to retirement your approach to risk has to be very different you should view that you need to have your life’s your spending money

in Safe Harbor for at least the next five years so you can withstand volatility you don’t want to be selling stocks when they’re going down but the reverse is also true if you are away from retirement volatility is your friend because you get to buy stocks when they’re going down when they’re volatile and so again I think that’s a very very important takeaway uh anything you would add to that Peter no I think that’s right I mean if you’re young you almost want to embrace a down Market uh because then as you say you get to buy

things cheaper you know the stock market is the only thing in the world where it becomes more attractive to people the more expensive things get you know we talked about Walmart earlier Walmart made its business on everyday low prices if the stock exchange said everyday low prices everyone would be scared and no one would show up that’s so I think that people should not be afraid those that have a long-term time Horizon time Horizon is so key here those with that long-term time Horizon should not fear a

down Market they should embrace one so good they great transition because leou and Dallas asked the question how do I profit and how what are the best strategies in volatile times and let’s stay away from Trading trying to time the markets because frankly I’ve never seen anyone who gets it right maybe you have a secret that I don’t know about but anyone who could time the markets wouldn’t wouldn’t even need to invest because they get it all right but what should a person do to profit from it what are the best strategies in volatile

times well one of my favorite Warren Buffett quotes and I’m just paraphrasing because I don’t know it exactly was I benefit from other people’s foolishness and impatience right and when you get volatile markets that sort of is being expressed through people’s emotions and sometimes those emotions get out of whack and when they do which results in lower prices and people’s impatience well that’s an opportunity to add to one’s portfolio on on the flip side when everyone is really excited and the bullishness is ulent and that that bull

booat is very full that’s when actually you should get a bit more cautious in committing new money this is kind of like a seesaw if everyone’s on one side of the Seesaw the snap the other direction could be a lot more dramatic uh because everyone jumps off and all of a sudden the other side gets a lot more volatile we had a question from Robert and Boston and his question was around are you better off in a volatile Market an individual ual stocks or an indexes Scott what are your thoughts on that so

so so look what individual stocks do in a portfolio um create stock concentrations if I’m buying fewer stocks I’ve got bigger concentrations what concentrations do is magnify volatility um so the the word volatility in of itself isn’t necessarily bad because volatility can mean something shooting way up or way down sometimes at the same time some stocks are up some stocks are down we’re not big proponents of large uh stock concentrations we prefer to own larger baskets of stocks um but when things are cheap out there

you know if certain indexes are cheap if certain areas of the market are cheap you might want to add a little extra midcap here a little extra you know uh Health Care here a little extra energy here but at the end of the day we’ prefer to own you know separately managed accounts that are set spread out among a number of different stocks you know buy the indexes buy ETFs because if you bet wrong uh in a volatile Market you can really get hurt you know we talked about this last week a little bit that in fact being Diversified for the

first time in a while so far this year has been your friend you do better you’ve done better with International stocks you’ve done better with small caps oh excuse me with midcaps and in fact the The Meta stocks the mag s haven’t kept up with the S&P 500 in general so even meta I noticed was having a little bit of sness here Peter after being up almost 20% it just for this year so quite a it was up 20 days in a row interestingly enough yeah wow prior to these last couple days that’s incredible hey can we talk a little bit

just in the volatility question one of the questions that always comes up should I buy gold uh I remember Peter doing my CFA years ago unfortunately it was many decades ago uh learning that the correlation the way all asset classes behave triples after the S&P Falls 15% and I’ve noticed actually that when when the market when the S&P Falls 20 25% which is rare but happens every few years gold seems to go down just like everything else so does everything other than bonds how do you think about gold

is it’s obviously hitting new highs Goldman and several other researchers saying it’s going to keep on going up uh how do how do how do you think about gold as an asset class and especially in context of Bitcoin which I know is viewed as an alternative to gold as as another asset so do you think about that in divers diversifying in a in a volatile Market well to to your first point is yeah when you’re down 20% or more or all correlations go to one right when people need to sell something they sell every anything they can and by

correlation we mean the way asset classes B they treat together at a certain point right right when when basically when you get a tap on the shoulder with a margin call for example and U you need just you sell anything you can and that’s when everything starts to trade together uh with respect to Gold I’ve been we’ve been as a firm we’ve been pretty bullish over the last bunch of years uh you know when you look back going back to when I started at least 2018 and we went through a negative interest rate World a

zero interest rate World QE then we sort of transitioned out of that but gold still did very well because gold has become this very important Central Bank asset that after the US and the EU uh basically froze half of Russia’s Central Bank Reserves after they invaded Ukraine foreigners that owned a lot of us treasuries and a lot of other us assets felt that you know what gold can be a very important asset for me to own me being a central bank or a foreign government where I can domicile uh myself I can stick it in a

vault and no one can freeze it no one can take it and and it’s my own thing and you know that rallying gold obviously has continued the interesting thing that we still see upside you inflation adjust gold for where it was in 1980 and you talking about a price of about $3500 so there’s still upside uh mostly the buying that has lifted it to this level in the face of higher interest rates in the face of a strong dollar has been as I mentioned foreigners but I think that the Western investor is sort of that next pent up

demand for gold where they’ve been more hiding out in treasuries yielding four and a half percent but also understanding that gold can be an important part of one’s portfolio as well and Bitcoin uh does it should people think of Bitcoin as an alter alternative to Gold Scott I’m sure you get these calls all the time too I know I do I everyone’s always so well I think Bitcoin is like gold I always try to tell people well you can actually do something with gold I don’t even know what you can do with Bitcoin you can’t

even go to El Salvador and use it anymore so so tell me how do you think about that as an asset class uh relative to gold as I’m as I’m looking at Peter and you’re talking about Bitcoin it makes me smile um we talk about this often right the difference is how many thousands of years has gold been around Peter you know you remind me all the time so yeah Gold’s been around and has been a standard for 5,000 years look I I own a little Bitcoin myself some of my clients own it I understand the idea that we’ve

got a new technology here that might create uh some efficiencies there is a scarcity but right now again and I am no expert but right now Bitcoin appears to me to be purely a speculate a speculation I own some because I think it will become more valuable down the road because of the scarcity of it and because of the demand and because of the fact that it’s becoming institutionalized having said that I just don’t think you can compare you know Bitcoin to Gold I think a lot of people like to say it’s the new digital

gold I think that’s I think that remains to be seen and I’m neither you know extremely bullish or extremely negative on it like I said I own some I’ve got clients who are interested in it to have one or two% of Bitcoin in your portfolio I don’t think it’s a terrible thing we do live in a world that is evolving technologically it has certain ly gotten some institutional acceptance It’s not like three years ago I would have never put a client in Bitcoin obviously I should have looking at where the numbers

are but I didn’t have the confidence in it um but yeah I I I look at it as a play on a technology um that if it does become really widely adopted and if it does become extremely institutionally adopted yeah you could see Bitcoin you know go up significantly from here but I think Golds are different in our mind in our portfolios we think of gold differently so thank you let’s uh let’s shift to next week um we’re just talking about technology there’s no bigger darling than Nvidia so what are you expecting next week Peter how it’s

almost like again it’s priced in some softness here already we’ve had a little bit of a pullback so we’re not at all-time highs again um and so how how how what are you expecting what do you think people should do in advance obviously don’t do anything dramatic but what do you think’s going to happen next week with Nvidia this this is going to be really fascinating report because it comes after The Deep seek news where a Chinese company revealed to the world that they can create a similar AI model

to a meta for example or Microsoft at a fraction of the price which would imply less demand for NVIDIA chips but on the other hand we heard from all the hyperscalers Microsoft and and and Amazon and Google and meta that they’re still spending extraordinary amounts of money where nid would be a beneficiary of that so how how that earnings report sort of balances those two in terms of their not only the quarter that just ended but their order rates for the quarter that we’re currently in that’s going to be really interesting and if

the mag seven trade which is really sort of splintered meta really became sort of the last man standing in this trade can Nvidia sort of regain its stature in the mag 7 or is that going to potentially drop out like some of the others so it’s a really big deal uh that report in addition to as I said earlier we’re going to hear from more retailers to sort of get a sense of Home Depot is one of the big ones right so we’ve got Home Depot coming up that’s a great pulse of where consumers are as noticed home

builders have been quite soft lately um so do you think Home Depot continues the trend or are they more like Walmart or do you do you see some some positive news there well I I I think Home Depot’s challenge right now is the pace of existing home sales being at the lowest level since 1995 less transactions that take place between a buyer and seller well you don’t get that turnover there’s less paint being bought there’s less need to redo the bathroom or put in some new flooring yeah don’t tell that to my wife

I’m the worst handyman in the world she keeps selling me we’ve got to do some work in us and I’m like yeah yeah yeah let’s wait well that that’s the flip side yeah you you you’ve been sitting your house for a while you start doing renovations but a lot of people did Renovations during covid so there’s less need to do them again so that’s the challenge with Home Depot’s business and their their their revenues have been sort of flattish over the past couple quarters and so we’ve got personal income next week I think we’ve also got

spending report little bit of a gauge of inflation do you expect any big surprises yeah there shouldn’t be uh I think we’re the week after is will be uh more heavy in terms of the data that potentially can move markets but you know that inflation number is one that the FED watches the pce uh usually doesn’t deviate too much from expectations but it’s still going to be a big focus in the markets next week well listen Scott uh Peter thank you very much at rise up we’re always trying to inform and educate you how to think

about the markets how to make smart choices if you do have any questions if you’d like to have a portfolio review uh you can go to the website wealth on let me get this right wealth on.com free I think there’s a link below and um Scott or Peter or one of the team would do research for you we will of course we care a lot about having your input and your ideas your feedback your questions this week’s set of questions came because we had several uh interesting ideas about how to manage volatility so any ideas you have to make

the show better other than having Terry here who we know makes it a lot better but Jens thank you very much for being here and enjoy the rest of what should be for many of you the the uh ski ski week if you have kids so we’ll see you again next [Music] week for