The End of a Wild Market Week and How to Stay Focused
The reciprocal tariffs are on … or not … or maybe just a little … except for China, and those are still big … but they could still come back for everyone else … maybe.
It’s no wonder the markets felt like a roller coaster this week.
In the chart below, you can see how the market reacted after the tariff news on April 2.
Last Sunday, President Trump said he wasn’t concerned about the stock market.
“I don’t want anything to go down, but sometimes you have to take medicine to fix something.”
But after declaring a 90-day pause on the tariffs, the stock market shot up and Trump was happily talking about, “the biggest day in financial history.”
But we haven’t recovered all the losses … at least, not yet.
So, after enduring one of the wildest weeks on Wall Street ever, what are we to do now?
InvestorPlace’s global macro analyst Eric Fry shared plenty of good advice this week alongside of his accurate forecast of the tariff “pause.”
Let’s look at Eric’s advice. Plus, I’ll give you one of his Investment Report picks that’s thriving despite the market whipsaws.
A Macro View of the Markets
For newer Digest readers, Eric takes a “macro” view of the markets.
Most of Wall Street focuses on “micro” analysis – price/earnings ratios, income statements and other company details.
Eric looks for the big-picture trends that drive huge, multi-year moves in entire sectors of the market. Then he narrows his focus to find the stocks that will be the biggest winners in these megatrends.
Using this method, Eric has clocked more than 40 10X stock winners.
That may not sound so incredible … but let me put this in context …
Investing experts are lucky to make one 1,000% call in their career. It’s rare to have more than one, but it does occasionally happen.
But 40?
That’s not just above the rest; that’s in the stratosphere.
When I spoke to Eric on Monday, he said unequivocally that the administration’s method to roll out the tariffs was unworkable.
And he made a prediction…
My bullish scenario is that this proposed tariff policy is so bad that it’s good. I think obviously there’s been severe trade imbalances for a long time that we need to correct as a nation. I personally don’t believe this particular policy is the best way to achieve that, and it is so ill-conceived and potentially devastating that I don’t think it’ll last long.
I think the Trump administration will probably start to score some victories country by country, and I’m hoping enough mini victories that it would be able to claim a victory over the entire thing and abandon this sweeping global tax that it has imposed on 185 countries.
And if that happens, I think the markets reverse. I’m optimistic because I doubt that this particular iteration of the tariff policy will remain in effect for very long.
I spoke to Eric again on Wednesday, just an hour after the announcement that the tariff plan was being pulled back … and the markets had already started to rally. Here’s part of that conversation.
The markets are rallying as we speak pretty significantly, and so the trade war is not over, but it’s certainly taken a new twist.
And I would point out that this particular move by Trump mirrors almost exactly what billionaire Bill Ackman had been advocating for the last two days. Bill Ackman is a billionaire hedge fund manager in New York, a major contributor to the Republican Party, a major supporter of Donald Trump.
He was not alone. Jamie Dimon, CEO of JPMorgan had said similar things in the last 48 hours, as had other prominent Trump supporters on Wall Street.
So, I think it’s likely that the president saw prominent members of the Republican Party and major donors to the Republican Party breaking ranks with him on this particular policy. I think that’s the biggest reason why he made this announcement today.
Even as the markets were soaring on Wednesday, Eric was quick to note that there were probably bumps in the road ahead … which we saw immediately on Thursday when the market fell again.
Here was his advice to investors feeling whipsawed by the market action.
When stocks are falling, you always own too much of them. And when they’re going up, you don’t own enough of them. That’s just kind of the nature of the beast.
But you have to continue to look ahead and not be buffeted too badly by the headlines, by the noise, and just continue to as coolly as you can. Assess the opportunities that are in front of you, and then pull the trigger if it’s appropriate.
So, I think that is a practice that runs through all markets: bull markets, bear markets. And in this particular case, I think the same thing.
One Stock to Consider Today
The philosophy that has served Eric so well is reflected in his most recent picks. In his Investment Report service, Eric recently recommended luxury clothing maker Canada Goose Holdings Inc. (GOOS).
For readers less familiar with the brand, here’s Eric:
Canada Goose is a global performance luxury and lifestyle brand founded in 1957. Like Patagonia and North Face, Canada Goose manufactures and sells a range of outdoor sportswear like parkas, puffers, rain jackets, and hoodies – both for genuine outdoor adventurers and for urban chic wannabes.
Now, the obvious question is “what about the trade war? Won’t that hurt Goose’s profits?
Eric writes that while “buying Canada” in the U.S. has become more expensive in most cases, Canada Goose exports its goods to the U.S. duty-free. Under the U.S-Mexico-Canada Agreement (USMCA) President Trump signed during his first term, the U.S. levies no tariffs on apparel and textile exports from Canada to the U.S.
Of course, that doesn’t mean GOOS is in for a smooth ride higher. Expect volatility, which is what GOOS has experienced in April as you can see below.
But whatever the short-term ups and downs might be, Eric urges investors to reorient their focus:
I have no idea where the stock market is heading next, nor do I know how long or how deep the current selloff will go. But I do know that buying great companies at good prices is the key to building wealth over the long term, which is why I will continue to make select “Buy” recommendations throughout this downturn.
It’s a good bet volatility in general is going to continue, and when it does, you’re best served by ignoring the noise, and continue to coolly assess the opportunities in front of you and act when it’s appropriate.
Click here to learn more about Eric’s Investment Report picks.
Enjoy your weekend,
Luis Hernandez
Editor in Chief, InvestorPlace
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