Money Life with Chuck Jaffe

Laurence Kotlikoff [https://kotlikoff.net], professor of economics at Boston University and the founder of Maxifi.com [https://maxifi.com] — which helps investors bring economics into their financial planning decisions — says investors who have spent decades thinking the stock market rebounds from every dip and decline could be in for a different story with a coming recession, and he thinks they should be trying to lock in their standard of living rather than focusing on historic rates of return. To that end, he says he has cut his personal equity exposure from 60 percent of the portfolio to 20-25 percent. "I do see only downside risk from what's going on," Kotlikoff says. "Even if there is nothing changed on average, the uncertainty itself is enough to produce a recession and a big drop in the stock market." Ted Rossman discusses a recent Bankrate.com [https://bankrate.com] survey which showed that more than half of Americans say they will spend less on discretionary items [https://bankrate.com/credit-cards/news/discretionary-spending-survey/] like travel, dining out and live entertainment, but he also notes how plans to limit spending often fail to translate into action and reality. Plus, Chuck answers a listener's question about how to turn the portfolio of his younger self into something more age appropriate and mature.

John Petrides, portfolio manager at Tocqueville Asset Management [https://tocqueville.com], says that today's heightened volatility should have investors spreading their bets, "because the world is so unsettled right now that it's hard to have conviction to lean into one position, one asset class or one investment all on one side of the boat at one time." He says the market has ridden out a storm but isn't settled, and investors will want to extend their international investments to get good values, but will want to capitalize on premiums currently available in bonds, will want to diversify geopolitical risk with gold and will want to be selective on domestic stocks as they watch the tariff and economic situations play out. Plus journalist Sara Bongiorni, who wrote a book in 2007 called “A Year Without Made in China [https://www.amazon.com/Year-Without-Made-China-Adventure/dp/0470116137],” which chronicled her efforts to simply avoid goods made in China for 12 months, discusses how hard she thinks it will be for Americans to minimize the impact of tariff policies, noting that certain industries — from shoes to lamps to the materials needed to celebrate July 4 — are virtually impossible to buy from any place but China, and she notes that the efforts it takes to avoid Chinese goods also can be extreme, leaving consumers with no easy alternatives.

Jack Janasiewicz, senior vice president and portfolio strategist at Natixis Investment Managers [https://im.natixis.com], says the market is in the middle of "one big range trade, and we're probably a lot closer to being at the top of the range rather than the bottom," which means there is more likely room to move down from here rather than to post big gains. Janasiewicz says the the slowing economy needs more time to work through the hard data, which will take time, and will likely lead to a volatile market within the current range. Janasiewicz says the market must also deal with short-term concerns over the weakening dollar, but says he think those worries are overblown when it comes to their long-term impact; like most analysts right now, he likes gold as a dollar diversifier to help ride out the issues. Brian Griggs, head of portfolio strategy and solutions at Nuveen [https://nuveen.com], says that investors have long had too much dependence on large-cap domestic stocks and an over-reliance on duration in fixed-income allocations, which is leading to painful portfolio moves caused by today's stressed stock and bond markets. He talks about making small-but-appropriate portfolio tweaks to lower portfolio volatility and diversify portfolios to improve their investment return and comfort level. Plus we revisit a recent question that Chuck answered from a listener who must decide which investments they will sell in order to raise some cash to pay for one-time additional expenses.

Steve Sosnick [https://ibkrcampus.com/author/steve-sosnick/], chief strategist at Interactive Brokers [https://interactivebrokers.com], says that investors appear divorced from fundamentals, buying dips, chasing rallies and generally hoping for a lot of things to go right as the market climbs "a huge wall of worry" and mostly ignores that earnings growth forecasts of 12 percent entering the year are now being predicted at about 7 percent. Sosnick expects interest rate cuts later this year, but notes that they will be made from a position of economic weakness, and he also thinks the stock market is much more likely to re-test its April lows — right after tariff policies were announced — than to set new record highs, noting that just the conditions that are clear and aren't muddled by uncertainty should make investors think "Buckle in for volatility." Just over a month after making an actively managed commodities fund the ETF of the Week, Todd Rosenbluth head of research at VettaFi [https://vettafi.com], turns his focus back to commodities, this time highlighting an index-based option from Aberdeen Investments. Plus Chuck answers a listener's question about investing in private credit and why he has repeatedly questioned experts about the potential for trouble in that emerging investment arena, which those money managers routinely have downplayed in their answers.

Chris Zaccarelli, chief investment officer at Northlight Asset Management [https://northlightam.com], says that investors watching headlines about the economy, the weakening dollar and more need to realize that policy shifts and global changes play out over long stretches of time, so that investors should react in small, modest ways. For Zaccarelli, that has included adding gold to the portfolio as a dollar diversifier and reducing risk while waiting to see how the economy unfolds and creates chances to be opportunistic buyers in areas like small-cap stocks and more. Rachel Perez discusses a survey done by Secure Data Recovery [https://securedatarecovery.com] which looks at Americans' obsession with tracking their data — from hours sleeping to weight to all things financial — which found that 70 percent of the Americans who track their spending (and nearly two-thirds of those who track savings) say that watching and analyzing the numbers makes them anxious [https://securedatarecovery.com/blog/study-of-quantified-self-anxiety]. Plus retired economics teacher David Mayer discusses his new book, "Economics in Plain English," and why in challenging times there seems to be trouble coming up with standard definitions for common terms like "tariff."