A week and a half wild turn in the stock market has shaken up Louisiana investors.
Stocks plummeted after President Donald Trump announced widespread new tariffs on almost all US trading partners on April 2. Then on Wednesday, the S&P 500 had its best day since the 2008 financial crisis, rising 9.5% and suspending almost all tariffs for 90 days after Trump set back. However, it was dropped on Thursday following that Wednesday’s rally.
Uncertainty remains high, leaving the whipsing markets with everyone from global CEOs to penny pinched retirees to question what the economy and financial markets are beyond.
However, local financial experts who recognized that there was a move that investors could do to strengthen their portfolios, provided one piece of advice, mainly to shareholders. Keep the course, continue to work together towards your personal financial goals and don’t make dramatic moves.
“You prepare your clients for the decline, flow and surprises of the market,” said Pete Bush, who manages $450 million at Horizon Financial Group in Baton Rouge. “We’re building a portfolio to prepare this kind of time.”
One positive thing about recent market fluctuations is that it shows the benefits of allocating assets. Bush said his clients are coming to his office in hopes of a 20% reduction in investment.
They were surprised to see that the decline was less than they feared. “Real estate, gold, value stock, big blue chips, they hang a lot,” he said.
“Come breath”
Last year’s Trump election caused a surge in stocks as investors wanted market-friendly policies, such as lower taxes and relaxed regulations. However, he also spoke about tariffs, and his decision earlier this month called for all major US trading partners to wipe out tariffs quickly prompted a market failure.
Mainstream economists said tariffs slow growth and promote inflation. Corporate leaders said they are preparing to reduce spending. Some influential CEOs said a recession is likely to occur.
Peter Richity, a finance professor at Tulane University, called Trump’s tariffs “self-harm,” overturning the US economy, where the stock market was generated from record unemployment and two-year profits above 20%.
“This is the worst economic move within the presidential administration in the last 90 years,” said Richityy, who tracks regional stocks in the South through the university’s Birken Road report. To find something with a more negative effect, he said you must go back to President Herbert Hoover’s policies that led to the Great Repression.
B1Bank CEO Jude Melville said uncertainty over the past two months has led to fewer clients seeking loans compared to the end of last year. However, he said recent moves by Trump have not yet raised the possibility of a higher default.
“It’s not off the charts and there are no significant signs of decreasing credit,” he said. “People hold their breath for a moment and see where things get organized.”
Market fluctuations have not affected how B1Bank operates or how it invests in capital, according to Melville. Management will look at which decisions are best in the long term and do not work based on daily stock prices. “But certainly, the stock market rise gives us more options,” he said.
Trade, politics, stock trading
Local investment advisors said it’s easy to communicate clients’ political trends, depending on how they responded to market fluctuations. Trump supporters hope to remain stable, but “Never Trump” Republicans and Democrats are likely to see disaster first.
But it’s not a good idea for personal politics to affect financial movements, they said.
“Trump is the elephant in the room, but he is the elephant who won the election,” said Mickey Guidry, managing partner at Altus Wealth Management in Baton Rouge. “It had an impact on the perception of what was going on.”
Guidry, who manages $900 million, said he wants to diversify its clients. This includes moving to small and medium-sized stocks, defense stocks, and dividend paying stocks. Examples of defense stocks include drugs, tobacco companies and brewers.
“No matter what the economy is, people are going to drink beer and smoke,” he said.
John Paul Caswell, president of Iron Horse Financial in Baton Rouge, said while stock prices are unpleasant, the only clients who are losing money are those who are coming out of the market.
“No one wants to see a recession in the 401(k), but we’ve been actively working to make calls and make sure our clients are comfortable,” he said.
The fact that the US continues to decline in private sector employment and oil prices suggests that the economy may remain resilient, Caswell said.
That could lead people to enter the market as stock prices drop. “For people who have never invested, it’s the perfect time to get in,” he said.
Caswell said some clients are looking closely at the market.
A lingering question is what happens next with customs duties. Will Trump go back to taking the hardline? Or is he using the threat of increasing the cost of exporting goods and negotiating concessions from trading partners?
Austin Zahn Brecher, director of investment and advice at JP Morgan Private Bank in Louisiana, said the least likely outcome is a return to the trade status quo.
“We talk to our clients and we confirm with them what we can do to make them more resilient in the long run,” he said.
This includes investing in conservative and stable sectors, such as infrastructure, gold purchases, portfolio rebalancing, and moving from inventory to bonds.
“There’s a lot of uncertainty,” he said.
