Brian Gubernick breaks down Trump's April 2 tariff announcement: 10% on all imports, 54% on Chinese goods. Markets tanked, with the Dow falling 4% then 5.5%, the S&P 500 down 6%. Gubernick turns to Warren Buffett's playbook: stay calm, avoid panic selling, treat dips as buying chances.
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Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. As of the time of this recording, the stock market is experiencing a lot of turmoil. Even some unprecedented turmoil. The economy is rattled a bit. Economies around the world are rattled. And I think investors are on edge. I want to talk a little bit around what's causing this upheaval and maybe some ideas as to how we can navigate these rather uncertain times. Now, again, when I'm recording this, it's on the heels of a Thursday and Friday in the market that were complete chaos. I, I don't think there's going to be some sudden turnaround, but even still, what we're going to discuss here is pretty applicable. So we're going to talk a little bit around the tariff implementations. I think we'll talk about the market, market's reaction to that, this, uh, long-term effects, and we're going to bring our buddy Warren Buffett's perspective into today's episode. So what's causing this current chaos and, and, and, and the market's reaction to it? So on April 2nd, President Trump announced these sweeping tariffs, which included a 10% tax levy on all imports and higher rates on specific countries, notably a 54% total tariff on Chinese goods. The market responded. The announcement led to a pretty significant market downturn on April 3rd. So on Thursday, the Dow Jones plummeted nearly 1,700 points, 4%, which marked its worst day since, I think, March of 2020. Then on April 4th, on Friday, the market continued its decline with the Dow dropping an additional 5.5%, which was 2,200 points, which brought its 2-day loss to nearly 4,000 points. The S&P 500 fell 6%. The NASDAQ declined almost 6%, which put it into bear market territory. Things are crazy. Things are crazy. Investors and investor sentiment— I mean, economists and analysts are expressing concerns about potential what they're calling stagflation, which is a combination of stagnant economic growth and high inflation. And many are saying there's an increased likelihood of a recession. As a matter of fact, Goldman Sachs, who we work with quite a bit in our businesses, raised their expectation on recession. So what are the potential long-term consequences here? There's, there's some good potential consequences and there's some bad potential consequences. Let's talk about it. So the negative implications, uh, number one Could be an economic slowdown. The tariffs could lead to reduced consumer spending and reduced corporate earnings as a result, which potentially tips the economy into recession territory. So there could be economic slowdown. There could be global trade tensions. Uh, we're seeing right now retaliatory tariffs from countries that are affected, and that might escalate into full-blown trade war. Which disrupts international supply chains, increase costs for businesses, and ultimately increase costs for consumers. And then lastly, with respect to negative implications— then there's more beyond these big three, but here's my big three. Third one is just market volatility. I think continued uncertainty may result in prolonged market instability, and that affects my account, your account, retirement accounts, investment portfolios. Market volatility impacts our math. Now, we did this because there's a belief that there's potential positive outcomes as well. Number 1, domestic industry boost. The tariffs could incentivize companies to relocate manufacturing to the US, which potentially creates more jobs, reduces reliance on foreign production. It can be good for us domestically. Number 2, uh, there's trade negotiation leverage. The US is going to gain leverage in renegotiating trade deals with many countries, and in doing so is going to be able to achieve more favorable terms. So there's potential pros and there's potential cons. I guess time will play out and we'll see how it goes. There's many on one side of the aisle that will look at things in the past and in our country's past and say, here's why it's going to work. And then there's others on the other side of the aisle that will look at our country's past and say, here's why it won't work. Uh, there's a lot of good arguments on both sides. We'll have to see how it shakes out. Now I'm, I want to talk about how we should react. And I think we've, we've got to turn to our buddy Warren Buffett and his perspective on navigating market volatility. And if you've been listening to the No Days Off podcast for a while, you could probably guess where our buddy Warren is gonna land. Warren's approach, he advises maintaining a long-term perspective during market downturns. Long-term perspective during market downturns. Now, you have to have the mental and intestinal fortitude to weather some of this, but Warren would say, stay the course. He would emphasize that market fluctuations are normal and that investors should avoid making any sort of impulsive decision based on short-term events. If you look at the market, it will always go up over time. You just have to be willing to stick it out. Recently I read an article written about Warren. I think it was in CNBC where Warren referenced the poem, the poem by Rudyard Kipling called "If." And I'm not going to read you the whole poem. Go look it up. But the poem "If," it's about The mindset investors should adopt during turbulent times because the poem's about encouraging resilience, composure, and, and self-belief amidst all this adversity and turmoil. Definitely go read that poem. Warren cites it all of the time, and there's probably no better time to cite it than right now. So the key takeaways from our buddy Warren: stay calm, avoid panic selling, Market downturns can actually present buying opportunities for the long-term investor. Look for Warren's company where he's sitting on an awful lot of cash. Look for him to maybe make some moves in the coming days or weeks where he starts to suddenly see maybe some bargains that didn't, didn't otherwise exist. So I think number one, you got to stay calm. Number two, Warren would say to focus on fundamentals. In other words, invest in companies with strong fundamentals that are likely to withstand economic challenges. There's ever a time to look at value companies, those that are established, those that have been around for a while with a, with a solid product or a solid service. Now's the time. Invest in those companies that have strong fundamentals, not just in the product or service, but their actual profit and loss statement is sound. It's a profitable company. Lastly, we got to have a long-term perspective. Remember that markets have historically recovered from downturns, rewarding those investors that are— that were patient and were willing to stick it out. So follow this stuff closely. You know, don't, don't turn a blind eye to what's going on. I know many of you do not, but some of you might feel overwhelmed. And if you feel overwhelmed, it's likely because you haven't listened to enough or read enough to educate yourself around what's going on. This is not a political conversation for me today. I think that we should all be paying close attention. There will be opportunities that come about. You also need to have a strategy and stick to the strategy so that in the short term and long term, you're just fine. But you gotta have an understanding as to what's going on. In order to have that clarity. That's all I have for you today, the No Days Off Podcast. Thank you so much for listening. And remember, every single day brings a new opportunity to get better. So let's get after it.
