What Control Do You Have When Markets Feel Out of Control?

Enlightenment - A Herold & Lantern Investments Podcast

April 21, 2025 Season 7 | Episode 15

The global financial landscape is shifting beneath our feet as the dollar hits a three-year low and gold surges to record highs. This change defies conventional market wisdom - when equities fall, we expect treasuries and the dollar to strengthen as safe havens. Yet we're witnessing the opposite, raising profound questions about America's economic future in a changing world.
What's driving these unusual market reactions? At the heart lies America's persistent trade deficits, which stem from three fundamental causes: our low national savings rate compared to other countries, massive federal budget deficits approaching $2 trillion annually, and unfair international trade practices that disadvantage American producers. While tariffs address the third factor, they don't solve the underlying spending and saving imbalances that define our economy.
Using a simplified example of US-Vietnam trade, I demonstrate how different national spending habits naturally create trade imbalances. The concerning shift is that global investors may be questioning whether the dollar remains the stable store of value it's been for decades. This potential sea change demands we reconsider investment strategies that have served us well in the past.
For investors, these shifts present both challenges and opportunities. Fixed income investments have become surprisingly attractive, with municipal bonds offering 4-5% tax-free yields, preferred stocks paying 6-7% with favorable tax treatment, and traditional treasuries approaching 5% - the highest yields in 15 years. Retirees should be particularly vigilant about portfolio protection, creating adequate cash reserves to avoid withdrawing from depressed equities during market downturns.
Remember James Clear's wisdom: "Success is largely the failures you avoid." In uncertain markets, controlling what you can - your asset allocation, diversification strategy, and emotional responses - matters more than ever. How are you positioning your portfolio for this new economic reality? Does your strategy need adjustment as traditional market relationships evolve? These are the crucial questions every investor should be asking right now.

** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice.
For full disclosures, ADVs, and CRS Forms, please visit https://heroldlantern.com/disclosure **
To learn about becoming a Herold & Lantern Investments valued client, please visit https://heroldlantern.com/wealth-advisory-contact-form
Follow and Like Us on Youtube, Facebook, Twitter, and LinkedIn | @HeroldLantern

Chapters

1. Morning Update and Market Overview (00:00:00)

2. James Clear's Mindset for Uncertain Times (00:02:22)

3. Dollar Weakness and Treasury Yields Analysis (00:05:38)

4. Understanding Trade Deficits: Root Causes (00:10:55)

5. A Simplified Trade Example with Vietnam (00:16:11)

6. Portfolio Considerations During Trade Wars (00:21:42)

7. Protecting Retirement Portfolios from Volatility (00:27:14)

8. Tax Cuts and Political Implications (00:31:12)

9. Bond Opportunities in Current Market (00:35:09)