We’re continuing to follow market moves following various tariff announcements. But it's impossible to say whether we're out of the woods when it comes to recent market turbulence.
For some insight and guidance, “Marketplace Morning Report” host David Brancaccio welcomed back long-time business analyst on KRLD and friend of the show, David Johnson in Dallas. Below is an edited transcript of their conversation.
David Johnson: You know, you never call when the market's up. You never go, “We wanted to go to Dallas. We want to check in with Johnson because the Dow is up 2,000 points.”
David Brancaccio: I know, but we do need someone of your seasoned skill to help us through this. First of all, you're a bit like me, right? We have to talk to a lot of captains of industry in our line of work. I think you do it daily. What are you hearing about how to plan in this environment?
Johnson: They can't, you can't do it. And it's been that way, you know, since before the imposition of the tariffs. They said, “Well, we'll wait and see.” But if you have these big capital spending plans, you know, you just put them on hold. So, it started with the bankers. I was talking to bankers, and they said, “Well, you know, we've seen low and demand kind of back off, because they really are kind of postponing making commitments.” And then you talk to them themselves, they say, “Well, we've kind of put that on hold for the time being.”
Brancaccio: All right, but what if one is not a professional but worried about their retirement savings or their nest egg at their brokerage account? I mean, there's a readout on stock market volatility. It's called the VIX Index out of Chicago. I know you follow it. You know, used to run 13, 15, 18 on their crazy little scale. The VIX hit 52 last week. I mean, that's like pandemic lockdown level.
Johnson: Well, it actually was 53, but who's counting, who pays attention? But it's true. I mean, again, it's a reflection of that. Now, I mean, for your own investments, I mean, you don't just sit back benignly. We've learned that you don't just buy some good stuff and put on a shelf and forget about it, because otherwise you'd have a shelf full of, you know, Montgomery Wards and Pan Am and Sears and a bunch of stuff like that. It needs to be dynamic.
Brancaccio: But look, people know the work that you do. They know that you're following this very closely, and I'm sure they're calling you saying, “I cannot sleep at night because of all this toing and froing in these portfolios.” What do you tell them?
Johnson: Everybody's different. Because, you know, how old are you? Are you employed? You know, what's the likelihood of you not being employed? Are you going to get laid off? Have you got kids that are going to go to school? What kind of a mortgage have you got? What are the demands? So, everybody needs to have cash reserves. You can't be completely committed to the marketplace, whether it's stocks or bonds or hedge funds or anything else, all at once. You need to have some sort of cash reserves. And for some people, that may be a year's worth of cash, but you need to have that. You need to be diversified. You don't need to put all your eggs in one basket and no owning Nvidia and Google and Apple and Microsoft. It’s not diversification.
