When we meet with clients to create or review a financial plan, there’s a section where we try to get a sense of risk tolerance. We’ll show an asset allocation and its long-term expected return, and then, in big red numbers, what this portfolio would have lost in the 2008 financial crisis. We show it in percentage and dollar terms, based on the portfolio size at that time. The idea… Read More
A longtime friend and reader asked me to explain how tariffs work. Of course, it’s a politically charged topic, but a simple description of how they function should be apolitical and straightforward enough. I will start with a made-up product, Wakanda’s Widgets, which are imported to the US. My made-up supply chain has three players: the manufacturer in Wakanda, a US importer that also acts as a distributor and the end retailer… Read More
This past Thursday, President Trump announced tariffs on Chinese imports citing security concerns and a significant trade deficit and estimated approximately $50-$60 billion in new tariffs. This was a follow up to his previous announcement of a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum. Following both announcements, stocks proceeded to sell-off on fears of a trade-war. Since the simple act of increasing tariffs… Read More
