Chaos

In this episode of Nest Egg, Lisa and Lori dive headfirst into the stormy world of politics, exploring how the Trump agenda is shaking up the economy. From market volatility to real-world financial impacts, they break down the ripple effects of a news cycle that never seems to slow down.

Why are investors on edge? How are businesses reacting to policy shifts? And what does all this uncertainty mean for your personal finances? Lisa and Lori tackle these questions with sharp analysis, offering insights on how to protect and grow your nest egg even when the world feels chaotic.

Whether you’re a seasoned investor or just getting started, this episode will help you understand the bigger picture — and how to navigate it. Tune in for a thoughtful, no-nonsense look at the intersection of politics and your financial future.

Find out more and reach out to us on our blog.

Transcript

 Welcome to Nest Egg Podcast. This is Lisa James, and I'm here with my partner Lori Zieger. We're a team at Ingles and Snyder, LLC, an independent registered investment advisor in New York City.

The title of our podcast today is. Chaos. And it's in conjunction, uh, not only with the world we live in, but also with a blog that we wrote earlier, uh, well about a week or so ago.

And it starts with a quote, um, that I heard from Lenin, which said that there decades where nothing happens and weeks where decades happen. And, um, I think the reason why I was feeling this so acutely is that, um, the market was gyrating mostly negatively for, well, it was negative for a. Whole week and, uh, I was by myself because Lisa was in Mexico City having a wonderful time and misery loves company, so I missed her terribly.

What we did in, in writing this is try to understand what exactly was going on and, and what had sort of. Cause what was going on, we had anticipated in our last podcast and also in, uh, the blog before this, that there would be volatility, but we got way more than we bargained for. 

Yeah. You know, and I think that really a lot of people had expectations about what Trump.

Was gonna do that weren't accurate. I think there were a lot of expectations that Trump was gonna, uh, pay more attention to the stock market, uh, than he is now. Um, we certainly thought he cared about it, but he's been very clear. I think partly 'cause the stock market went up so much under Biden and then Biden loss, that he no longer thinks the stock market is the most important thing in his life.

And so what was considered a Trump. Put in the sense that the stock market went down a lot, that Trump would moderate his behavior in order for the stock market to be better. People now think that concept of a Trump put is much further away from current market. Prices than they did originally. 

And it seems like he's kind of thinking longer term.

You know, history's gonna ultimately decide whether Donald Trump will make America great again. Um, but he certainly made volatility great again, as I, as I said, greater 

than 

ever.  Yeah. And so we tried to sort of think about, you know, how did we get here? I started thinking about it and thought, you know. We are on an unsustainable fiscal path.

We've had unabated growth in our national debt. It was standing at 36 trillion, but it's ticking higher this week, every week, and the debt has continued to grow regardless of the economic environment. Whether you had surpluses, whether the economy was growing or the economy was shrinking. The 

only time it didn't grow is actually under Clinton when he raised taxes and the economy went up.

And basically what's happened since then is that every time the economy does better and there's a Republican administration, they cut taxes, which causes the deficit to go up because. They don't cut spending as much as the impact of the tax cuts. And then Democrats increased spending or have spent more money 'cause there was a crisis, like the financial crisis or even Trump in 2020.

He increased spending, but it was necessary. So I would just like to make a point about deficit spending and when you do it, when you have a good economy. That's the time that you can actually reduce the deficit and cutting taxes basically stops that from happening. The time that you want to use government money to create a deficit is when you have a problem like the financial crisis or like the pandemic and the fact that the US spent money.

And had a very aggressive federal reserve during those two periods means that the US economy did a lot better than the European economy after those crises ended. I don't think we're saying never have a, never have a deficit, but you can't have them under all circumstances 

and it, it didn't matter whether there was.

I would say a Democrat was in charge, except for, as you mentioned, bill Clinton or a Republican was in charge. It is just what they spent their money on were different things. Many people, I, I think  us included, thought that something had to be, had to be done. 

The reason something had to be done is now.

The interest on the debt is very expensive because our interest rates are over 4%, and so the amount of money that we are spending, just paying for the interest expense on the federal debt is now at 20% of our budget. So that is part of the reason it's, it's a real problem when interest rates are very low, the cost was very low.

Well, and that's why they keep saying they wanna get the tenure down because they want, uh, they don't wanna pay as much in terms of our, our interest costs. And that's 

why we'd 

like 

to have, people 

would like the Federal Reserve to cut short term rates as well. You know, but the last time they cut short term rates, it didn't help because the 10 year went up instead of down, which is the first time that ever happened.

Yeah. And, and then you've got, the other problem is who wants to buy the debt? If their feeling is that we're on an unsustainable uh, debt path. Right. So that was the birth of 

Doge 

department of 

uh, 

government efficiency. Government efficiency, 

and, and, you know, so the idea is how are we gonna cut our debt if we don't cut our spending?

And so having Elon Musk, uh, run around the government to, with a chainsaw, uh, with a chainsaw to cut expenses was.  Yeah, like a game show approach to getting people's attention and, uh, making the electorate feel that something was happening.  

So, um, what's interesting is that other countries have elected right of center leaders, and so it's not just in our country and we're seeing changes real time.

We've, um, I, I think the biggest change that we've seen, and I don't think this was, uh.  Election related is in Germany. Uh, in terms of the amount of spending, this is recently before that we saw, uh, China get some religion last year in terms of trying to stimulate their economy. This year, the, the Germans decided that they wanted to stimulate their economy.

It was really not stimulating 

their economy. They wanna spend more money on defense because they're concerned about Russia and they're consumers. And they're consumers. Yeah. But so they wanna do both. It's, it's more, and it is related to the person who was elected. That party is the party that was willing to spend more money and to, uh, bolster the 

economy.

And what's so odd about that and what's such a different point about that is that Germans were. Absolutely phobic to inflation after World War ii, just like the US was phobic to unemployment. And so to see Germany willing to go into deficit spending in order to achieve goals is really a big change. And it's been reflected in the German stock market, by the way.

Yeah. Which is up over 15% for the year while the US market is down. Um, but that's a, that's a, a seat change issue. Part of it was the defense stocks went up. Dramatically once they said they were gonna spend money building more weapons. But, um, but the second part of actually doing deficit spending is a general stimulative, uh, approach.

And so that added to the growth in the stock market. 

The other thing that I would say is that there's been kind of a wholesale rejection of government policies that maybe with very good intention, which proved to be really regressive. They were great for people with money and who own the means of production, but they were harmful for the average guy.

And so. Voters chose President Trump thinking he would look out for the average citizen and bring jobs back to America. 

Well, and you know, really what they were talking about here is trade policy. And trade policy is definitely a bipartisan, really eco economists driven concept, which is that you let.

Each country produce what they're best at, what they have the cheapest production costs for, and then trade with each other. And in a perfect world, in a perfect world, it's what we learned in economics. You, yeah. I mean, that's Adam 

Smith. 

That's economics 1 0 1. Right? You 

produce in the cheapest country, and it was a lot cheaper to produce in ca in China than it was to produce here.

But the problem is that, you know, it was actually, uh, Clinton that started the conversations about.  Allowing China into the World Trade Organization and it was the Bush administration that actually formally approved it and it happened. And so, you know, there's, there's sort of macro and micro consequences of these things.

The macro consequences is the goods got a lot cheaper 'cause Chinese uh, workers were paid far less. China also had no environmental control, so we. Essentially exported pollution to China and economic and US companies became more profitable environmental degradation to China and, and so on the one hand, the average American consumer benefited because the price of a lot of goods went down.

But on the other hand, a micro group of people,  you know, who worked in factories and had good at that time, you know, labor union. Jobs where they had pensions and healthcare, those people lost out. 

But I also wanna say that US companies also benefit because they could buy goods that were cheaper and that improved their margins.

And then what they did is that they took the money and they bought back stock and, and didn't have to invest in plant and equipment. And so the people that own stocks. They made money, but the workers who, you know, lost their job, um, they were, they were worse off. 

That's what they know is the precursor for any kind of populist agenda really is when the, the average person, uh, who used to have a good job, can't have a good job anymore.

The other thing that some have said have placed a burden on the worker, so to speak, is some of the, um,  policies that were instituted to confront, uh, a changing in climate. So there were subsidies for electric vehicles for wind and solar PA power, and we can  say that these are laudable policies. The problem is that it.

Places an undue burden on those who can least afford those. And countries that rely on, on wind and solar pay more for electricity than those that don't. That's just a fact. The technology hasn't gotten there yet, so it hurts again, the the common worker, if you will. 

Mm-hmm. So what I mean, what we're saying here is, is basically  here are the reasons that we've seen this kind of sea change, uh, throughout the world, uh, in terms of who's getting elected, both in Europe.

Uh, and in the US and, you know, in other countries in South America, we're not trying to say that, you know, there's a, a right way or a wrong way to approach these issues, but I.  These are the reasons that certain people voted for Trump, and these are the reasons he said that his objectives were to reduce immigration and to raise tariffs and to increase.

Production of energy, um, because he's trying to make things better for sort of the more common man in America so that their gas prices cheaper. Um, he is an objective for lowering inflation. Whether that will happen, I don't. We're a little more doubtful about, but also to bring jobs back to America. 

But it's gonna be ridiculously hard to do with this.

It's because manufacturing is the issue, not the, 

not the idea. I think a lot of people, regardless of their political stripes, would agree, let's bring some more manufacturing back to America and let's have good middle class manufacturing jobs. Um, but the, the execution of making this happen can create. As we're seeing, and we think we'll continue to see a lot of destruction along the way, uh, 

and disruptions and, and, and we don't have the people or the expertise or, uh, to do it.

I mean, the easiest thing, and I at one point. What thought about this? I mean, you could you, you could take the drug industry that was taken outta Puerto Rico during Clinton and put it back there. At least the facilities are still there. The hurricanes didn't get it. And I mean, you've got the risk of that, but you don't have a population of people that knows how to do it.

And when you train them, it's gonna cost you more. And it's just so, you don't have the facilities, you don't have the people. It's a problem. It's a real problem. Well, the real 

problem that we're seeing now. Is not necessarily the intention of bringing work back to the United States. It's the fact that we don't know what's gonna happen.

So if a company doesn't know, you know, who's gonna get the tariff and what industry is gonna have the tariff on it, then it makes it much harder for them to, to plan to move into, for example, a different area where. Maybe the US will be more protected because you're putting high tariffs on imported goods.

Well, if one day you have a high tariff and the next day you don't like, you as A CEO aren't gonna say, oh yeah, I'm gonna move into this area, you know, of my industry  in not knowing whether in fact. Whatever tariff is put in place will continue because it's a real, 

it's a real problem. The way that he is going about doing this is if we think we're having headaches, just trying to figure out which way stocks are gonna go, where companies are gonna just, just think if you're a CEO.

But I think they've 

heard the 

news because you know, one of the under under secretaries of the Treasury is now in charge of tariff messaging.  And we'll see how long that lasts, but still, but I think there's an awareness that the messaging has caused unnecessary 

disruption. Well, he and distraction, he said he's gonna put them on and put not, then he's decided, you know, let's see what Mexico, I mean, he's achieved, in all fairness, some.

Awfully good. Um,  um, things without doing anything but threatening. But in the process, he's created utter chaos for markets and companies trying to run their business. I mean, one of the reasons that the, the economy may still be holding up as well as he, he, um, as well as it is somebody has speculated, is there's been.

Ordering ahead of what they think might be tariffs so they can lock in lower prices. Well, what happens if the tariffs don't materialize or demand destruction happens? I mean, they've got a mess. If you're running a company, you're all of a sudden sitting on a bunch of inventory. So, I mean, it's really a problem 

you're seeing.

Wall Street firms also cut what their expectations are of economic growth because of the uncertainty, and it's not. It's not a cut. Because they are uncertain. It's a cut because uncertain businesses. Don't invest and that definitionally lowers growth. 

And then we can talk about all of the people that have been fired from the federal government.

You know, it's hurt certain areas of the countries, much worse than other areas of the country, but it has ramifications that continue to go through the economy. I mean, the software companies and the hardware companies and the, the, all the people that sold to these consumers. Or to these businesses, they're gonna have problems and then they're gonna have to cut their jobs.

Yeah. And then there becomes a psyche. Another way of saying there's a ripple effect. Yes. Although, you know, well, we believe all these things will happen. The degree of. You know, unemployment that will be created and the degree of uncertainty that's created. These are on the margin activities at the moment.

So while they'll slow the economy, we're not, you know, actually seeing from very many people at all that they're expecting a recession until we know more. About what happens in April. We need to, we need to see the whites of the eyes of some of these terror. Yeah. But,  but 

already you've already seen it. We read a couple of macro people all the time.

So Strategas is a 25% recession. Goldman Sachs went to 40% last 

week. Yeah, that's what I'm saying. It's, it's on the margin, but, but good luck is 

now saying 60%. He is an of double line. He's an outlier. He is an outliner, but he's well regarded and he is now saying a 60% chance of recessions. And the reason why we care is that during a recession, markets act much  more ne or much more negative in recessions than they are in just slow down.

Or in corrections. Mm-hmm. So instead of a 10 or even a 20% correction, you know, do we dare say a 50% correction if you have 

a recession, well then that's a bear market. Yeah. 

Well, I mean, bear market is defined what, after than 20, so more than two. Yeah. I mean, that's a lot more. Yeah. 

So I, I don't think we're really getting there yet.

And actually I think that. Now is time to talk about the section of our blog called a history lesson. One of the things that people have pointed out from time to time is that in the past, particularly in the passage of the Smoot Hawley Tariffs in the 1930s, people say. Wow. You know, that was a time period when passing tariffs led to the Great Depression, but in fact, it was not the tariffs alone that caused the depression, and this is the important thing to pay attention to.

It was. The tariffs started retaliatory tariffs from other countries and that's happening. And at the same time, uh, there was restrictive monetary policy and that 

is what tipped the scale at least. Explain that a little bit so people understand what restrictive monetary policy is. Well, 

I mean, it's sort of like if you think about the money supply making money.

Less available if interest rates are higher and you don't do anything about that. Those things are called considered restrictive because higher interest rates make it harder for businesses to borrow money and grow a shrinking money supply. Just creates less money in the system and tends to depress things like stock prices.

We have luckily, a situation now where there's like a lot of history behind us where the Federal Reserve is very aware of things that happened during the Depression. It's actually part of the reason that Ben Bernanke acted so aggressively during the financial crisis. So what needs to happen is if you start to see tariffs, retaliatory tariffs, economic slowdown, the job of the Fed at that point is to create easier economic policy so that business doesn't start to grind 

to a Hal.

But here's, but here's the tricky part. Just as Germany was absolutely paranoid, uh, about inflation, we came out of World War ii. Absolutely paranoid about employment. And so I think that the Federal Reserve is very worried about employment in, mm-hmm. In here. But not, they say they're worried about inflation, but that's a secondary kind of thing.

I would agree with 

that. I think inflation is secondary unless it's runaway if inflation, right. 

And what I am concerned about is that inflation is just. In hibernation, it's not gone. And in fact, one of the, the people that we read, uh, made the point that inflation, once it gets going, there's usually a pause, but then there is a second wave, uh, which tends to build over several years, and that, that second wave happens 87% of the time.

So you haven't really seen that inflation we're in the, we're in the trough. We are in the trough. But my concern is when you, when you talk to people, they are very concerned about inflation and there becomes something called inflation expectations. So they act in a way that can help fuel the inflation and, and that's what I think is partly going on.

Also, Trump can't get the price of eggs or Biden or anyone else can get the price of eggs to go down. The Federal Reserve has. Some control over inflation, but it's got very crude tools as well. Mm-hmm. So what I'm afraid of is that you have something, I mean, I, I know people that have. Heard or read or seen what's going on in Washington and say, oh, forget it.

I'm just gonna take all my money and I'm gonna put it into cash and I'll forget about it and go to sleep and you know, we'll call you in a couple of years when this too will pass. But the problem is. If you have inflation, then the money that you put under your mattress isn't gonna help you. It'll still be there if nobody takes it, but it may not be able to buy you the same amount of goods.

For some reason, it doesn't bother people that, uh, as long as they've got the dollars, that doesn't seem to bother them. But, well, the fact that it doesn't buy em the same thing, think 

like dollars that aren't going up, better than dollars that are going down. 

Well, it's true too, but, but. There are things that that may go up.

You, you've got to invest in certain things. Hard assets. Yes. 

You do have to look for things that are gonna help your money grow. And I mean, I think that one of the things that we have noticed this time around, that's a difference between us and some other advisors is, you know, we know some people are just saying to their clients,  you know, we've been in the market a long time, just.

Stick it out through thick and thin, write it up and down. And, um, while we agree that you don't go all in and all out and do extreme things, uh, when there's a change, we do look at each of our clients individually and say, are you closer to retirement? Are you in retirement? Is your equity percentage, maybe a little higher than it needs to be.

And then in those circumstances, we will take them down, you know, five or 10. In some cases, even 20%. If somebody was at 85 or 90% equities, we might take them down to 70 if their life circumstances warrants it. So I, I think the idea that you just. Stick with it no matter what has value, because you wanna stop people from leaving the market and going to cash like what Lori is saying, because then it begs the question of when do you get back in?

That's number one. And also in 

inflation, it cash is going to hurt you depending on how bad inflation is. 

So we, where we're of the view that you can reduce? An increase. Um, and that's a little bit more around the margin, but I think that for certain people that really makes 'em feel a lot more comfortable.

We've really tried to change what you own, so to speak, within when you own equities. I mean, I don't think I have. Done as much trading as I did at the beginning of this year because January was a very good month for all the kind of growth oriented sectors, and, and they will be good again. Um, but when you get into times like this that are so volatile, it just doesn't pay to be brave.

And so you had a situation coming into this. Where already the Magnificent seven were such a huge part of the s and p 500 and the US had outperformed for so many years and although.  I do believe in US exceptionalism. I think we're gonna take a break in terms of the US market necessarily outperforming some of the other markets.

Mm-hmm. And um, you know, when everything gets back to equilibrium, so to speak, you'll go back to those kinds of names and, and you don't wanna be naked them, it's just, I'm not sure you wanna be loaded to the gills. Right. So 

we're talking about Alphabet, Amazon, apple, Microsoft. Tesla, Nvidia, Facebook, uh, meta, meta, uh, you know, those, those are the stocks that were 35% of the s and p 500, and we and others have talked for years about how, you know, there's an over concentration and a small, and a handful of names.

And it, and it worked for a while because they were also semi monopolies and making a lot of money. But there's always a point at which it's gone too far. And we've hit that point because as soon as the economy goes a little bit on the rocks and the geopolitical situation becomes, uh, more fraught.

That's when people take money off the table from something that's gone up a lot. 

Well, they also may need the money, which is the worst position you could be in if you are, if the market is down. If the market is down, you wanna take your money out of the market while the market is up, not when the market is down.

Yeah. And so that's. You know, if you are in retirement or do anticipate needing the cash. So it's important to take it out, uh, ahead of time if you anticipate needing it for some reason. And different advisors have different ideas of how much of your. You know how much you should have on hand. It depends on whether, you know, one person is working or two people are working.

You're married and or you have a partner that is working. Um, but what we did is we, we raised cash levels. Um, uh, those of you who know me know that I am equities all the time for.  100%. And in client meetings in the last couple of months, neither we say to everyone that they should be a hundred percent  proud.

It's just, I just love for the concept of equities. I, I love, uh, I'm a, I'm the Warren Buffet of this pair, if you will, in terms of my love for, um, the US stock market. But this is not a time to be brave. Even if you are a person that can't afford to be in a hundred percent equities, this is not a time. So we have, we've raised some cash.

Uh, we've also, as I said, change where, uh, we're invested. Technology is over 30% of the market and we are way underweight of the technology stocks. We also cut our consumer discretionary exposure, and to the extent that we do have consumer discretionary exposure, it's uh, it's to some degree in other parts of the world or it's in things that people.

Kind of need, but you, so you, but you have to be careful. These are times to be careful. And then of course, everyone that knows us knows we love gold.  

Yes. And gold has been a fabulous hedge, really. Um, and it's interesting because we talk about gold as a hedge for geopolitical uncertainty,  uh, which is one of its roles.

But we also became interested in gold because of what was. The potential long-term change in the role of the dollar. As certain countries around the world don't wanna be beholden to trading in dollars, they have to set themselves up to be able to have a viable currency, whether it's a digital currency or not.

And so what we found is that a lot of countries around the world have central banks. That are buying gold. And that's been a, a big support of gold prices. 

That's, that's very recent. But we, um, the past couple years, we, we first wrote about investing in gold in 2019, and if you go to our website, which is two x wealth.ingles.net, you can go to our blogs market.

Insights. And if you go back to, I think it was December of 2019 is when we first started writing about gold. And we personally owned gold longer than that. So, um, 

and we own it for our clients Yes. And 

for clients. And I guess the other thing to say is to own gold. Stocks because there is precedent for the US not allowing individuals to own gold.

I believe it happened during the Roosevelt uh, administration. And if that happens and they make you sell gold coins or GLD can't exist any longer, which is an ETFs of gold coins, then the minors will, will, will do well because people will want people that look for. Gold.  Then we get asked about Bitcoin.

So, uh, we've written about Bitcoin and that's another really interesting blog. Yes, if you wanna, it's called 

Bitcoin Billionaire, 

uh, which has a rap songs. Uh, when you, um, when you mine for the coins, you can click on a coin and, and get a rap song about. About Bitcoin? I guess the thing that I would say about Bitcoin is this, I think it's very different than gold, and we make that point in the blog,  gold has been a store of value for years  Millennium, right?

And Bitcoin hasn't. And people say, well, it will be because it also has. Limited supply, which is true, it does have limited supply. The problem is gold does have some intrinsic value. We could argue about how big that is. You know, it can be used for your teeth, it can be used for jewelry.  There is. No intrinsic value for for Bitcoin.

Bitcoin is only based on what someone else is willing to pay for. Now that's, that's true for gold as well. But if everything went away, you could still use the gold for something. And  that 

there's a, there's a base value, 

there's a base value, a base value, and there isn't for Bitcoin. And that's the problem.

But know it's a base 

purpose for Bitcoin though, because you know, any country that has sanctions from the us you know, there's a benefit to being able to use Bitcoin, um, to move money. Exactly. Um, as my husband often points out, he, he thinks that, you know, a, a, a very high use. Point for Bitcoin is for criminal activity.

I mean, it's, it's generally true that your average person who owns Bitcoin really owns it as a speculative asset. They're not. Buying Teslas with it. Even though at one point I think Elon said you could buy a Tesla with Bitcoin, it's just too volatile. You know, you can't really, it's sort of considered a pseudo currency, but you can't really use it as a currency.

You have no idea what it's, 'cause one day to the next, the value can change by 10%. You know? So you, 

you think you paid one price for your Tesla, you'd turn out paying another one. Exactly. So I mean, you know, the other thing that you could use is. Is silver. Uh, and people have pointed out that they looked at a, a silver gold ratio, and silver used to be much, uh, more valuable relative to gold.

It's really way, it's so much cheaper. The problem with silver is the supply is not nearly as limited. That's the negative. The positive of silver is it has probably more intrinsic value. Yeah, more industrial use than the industrial use. Jewelry use. Yeah. Uh, it's used in solar, so I think 

central banks aren't buying silver.

That's, that's, that's correct. So, right. That's, 

and you know, it's, it's in your, your dining room drawer to some degree. There are a lot of, there's a lot of silver around. Yeah. So, um. Uh, that's, but that's another thing that, that people have pointed to that might be worth. 

Well, if you're looking for something that's speculative, that has some potential upside 

Yeah.

Or to yourself or has a story around it. Yeah. Yeah. And had yourself a bit, um, as I said, we've, we've used gold. That's been our choice. Yeah.  That covers it.  

That covers it for now.  

If you have any questions, please get in touch with us. I'm Lori at two x wealth.ingles.net, and my partner is Lisa at two x wealth.ingles.net.

We'd love to talk to you and, uh, we will get through this. We 

will. Yes, absolutely. Well, actually, I'd like to add on a, on a high note, one of the things that we read that we thought was really great, despite all the disruption and problems that can occur because of many moving parts this year, ultimately  American citizens and businesses  work hard and look for solutions.

And the reason we had.  American exceptionalism is because of that. And so we believe we will have, continue to have it. It is just the relative stock prices might be rocky here for a 

year or two. Yeah, I mean, you might have, uh, great innovation. I mean, the promise of AI really is amazing. Not just for technology uses, but also for, um, medical uses.

Alright, until the 

next time signing off.