Transcription
President Trump's tariff chaos is sending the stock market down this week, with record lows. The Nasdaq closed in a bear market for the first time since 2022, down more than 20% from its record high just this past December. The Dow posted its biggest back-to-back losses since March. The S&P fell 6% on Friday, bringing its losses for the week to 9.1%, as $6 trillion vanished from global markets in just 48 hours. This isn't just another correction; this is a once-in-a-generation wealth reset that could either destroy your portfolio or create the opportunity of a lifetime.
Felix here, and the Federal Reserve is signaling that they'll continue to wait and watch despite the market meltdown. Going into day three, triggered by Trump's new tariff regime, we're witnessing the most aggressive trade policy implementation since the 1930s, pre-World War II, and frankly, most investors are completely unprepared for what's coming. And for those of you with TikTok brains and unprepared, well, here is the essence: This isn't just about the headlines you've seen; it's about what happens next. My analysis shows that we're entering phase two of the market reaction, where sector rotation will create devastating losses for some and extraordinary opportunities for others.
And I haven't just figured this out, by the way. I used to be a banker for a little while. I've been looking after my own money for about 13 years, and before that, I was a salary slave. Once I managed to figure out how to work my money—or rather, learn how to make my money work for me—I got to retire in my early 40s. So the key metrics that I'm watching here suggest institutional money is already quietly positioning for specific winners that most retail investors haven't identified yet. I'll name you some in the next few minutes.
So in the next few minutes, I'll show you precisely how to identify which sectors will be decimated versus those poised for unprecedented growth; structure your portfolio not just to survive but to thrive during this crazy market; and implement specific hedging strategies that basically ensure you protect yourself—that most retail investors overlook—and spot the early warning signs of market stabilization to position yourself ahead of the recovery.
Look, I'd wager that many of you are feeling, well, a bit overwhelmed, a bit, you know, uncomfortable, right? And you're not alone. The fear and greed index has plunged to extreme fear; it was at four last time I looked, out of 100. That's crazy! That's like CO level. I mean, people really were scared then, right? We all thought we were going to die. So let me ask you this: Would having a clear, actionable plan for navigating these tariffs make you more confident about your investments? The answer to that is yes. Put a yes in the chat, and I'll know that this is going to be high value for you.
So I'm also curious, by the way, whether you've made changes to your portfolio in the last few days, few weeks, even, or are you just feeling frozen, unsure what to do? And again, just drop a quick yes or no in the comments below, and I'll see it. And maybe you're wondering why that weird guy is smiling. Because I have a rule book, and we use that rule book to navigate everything. It helps us spot the breakouts in the good times, and it helps us to get out before the collapses in the bad times. And I've literally sent this morning to my, my, my community of students that we mentor, me and my, my investment banking buddies, and um, I showed you on the screen here, and I sent them a couple of stocks that I'm looking at right now. I'm not recommending these; I'm just saying, like, these are some opportunities and exactly what price points I'm looking to buy them at. But in reality, for most people, this might be a little too early unless you fully understood the system behind it.
So if you want to fully understand the system that would have gotten you out—and you might be thinking, "That's a bit late now, isn't it?"—well, it's going to get you back in when the going gets good again, because it will. You're going to get the monster rally coming up after this crash. So who wants to learn it? Who wants to get that information for free? It took me quite a few years; I learned it from a bunch of investment bankers out there—some of the smartest traders in the world use investors to use these exact rules. So if you want to learn that, head over to felix.org/getfree, and, and, and tariff-proof, crash-proof, whatever-proof your portfolio, because it's always the same; it doesn't really matter what causes it; the strategy never really changes. And then, after you watch the master class, come back here and tell us what you make of it, right? Because tens of thousands of you have already told me amazing things about it. Now, shall we examine what's really happening in the market here now? Of course, Winston, my golden retriever, did all the research; he's very, very good with tariffs.
So we're witnessing literally what Reuters is calling a financial market shell shock as this global trade war looms, and, and they're honestly, for once, not exaggerating. And look, I've been through several market cycles, and what we're seeing now is quite extraordinary. The volatility we're experiencing since these tariffs kicked in—or were announced, rather—it's not exactly, you know, a picnic. The S&P and the NASDAQ have suffered their steepest decline since the pandemic. Crush, crush, crash, crash—can't even say the word anymore. So it's not something to take lightly. And as I say, CNN's fear and greed index plummeted to fear again. During the 2008 financial meltdown, when my friends were getting fired right, left, and center in investment banks—I know you all felt their pain—the index bottomed at 12. Global financial crisis, it was 12. And even in March 2020, when the world was getting shut down for the pandemic, well, we did drop to four—to two, rather. So, you know, we're approaching pandemic-level fear here, and it's only been like two days. But what's critically important to understand is that while bear markets are typically shorter than bull markets, they are emotionally intense, and you've already realized that.
So here's the thing: Most investors miss this. Moments of extreme fear have historically provided the best long-term buying opportunities—that is, if, and this is a big if, you have both some cash and the discipline to act while everybody else is panicking. So, speaking of discipline, I want you to write this down: Liquidity is oxygen during market downturns. What does that mean? Well, having cash reserves isn't just about safety; it's about having the ammunition to capitalize on opportunities when they present themselves.
So let's examine the actual trigger for this meltdown. Well, we were expecting sort of targeted tariffs aimed at certain sectors or products. What we got were broad-based, sweeping levies basically affecting every major trading partner at levels we haven't seen since pre-World War II. The scope is breathtaking: China, the EU, Southeast Asian nations like Vietnam, all facing substantial, massive import tariffs. And the calculation method doesn't appear to match the reciprocal tariff rhetoric. So they didn't just say, "Oh, what are the tariffs you're putting on us? Uh, we're going to copy that." No. From the analysis we've done here, the rates are basically determined by dividing America's trade deficit with each country by that country's total exports to the US and then cutting that figure in half. It's, well, it's a rather creative approach to trade policy, and the formula creates some very peculiar outcomes. For example, the UK is facing new tariffs despite the fact that the US actually runs a trade surplus with them and quite frankly owns most of the companies in the US that are worth owning. And sorry, my British friends, but it's true. Walk down your high street, right? Pret, a Moton, McDonald's—pretty much your entire retail sector is owned by those guys, and they take your profits and then they send them to Ireland where they don't pay any tax, or hardly any, and then they send them back to the US. It's the biggest capital drain on a first-world country we've seen in a very long time. It's what turns you into a vassal state; it's American policy, apparently. Let's see what we get in the comments for that statement. Now let's get back to the topic here. It makes not a lot of sense what's going on there if you really wanted to do a reciprocal framework. Well, so what's the market make of it? Well, the market's going like poof, right? Trillions are just evaporated within days, and this isn't a correction. We're not pricing in a global recession being triggered by a trade war; that's why we're going this low, that's why we're likely to go somewhat lower, and the anxiety that's been caused here amongst investors like yourself is very, very strong. And the question, of course, is: Is this a negotiating tactic designed to bring trading partners to the table, or is it something far more fundamental—an attempt to force a manufacturing back to American shores regardless of the short-term economic pain? The signals are well mixed. Just yesterday, the New York Times reported that Vietnam has offered to drop all tariffs on US goods to zero. That should be a win, right? But surprisingly, sources suggest the administration may be resistant to quick deals, and it indicates that they might be prioritizing the reshoring of manufacturing over immediate trade normalization. So the lack of a clear plan here is what adds to the uncertainty now. And of course, Vietnam doesn't buy all that many US goods, so it's not that useful if tariffs go to zero, whereas the US buys a heck of a lot of stuff from Vietnam because Vietnam is sort of taken over some of the stuff that used to get made in China. If you go to Ho Chi Min nowadays—which used to be one of the most beautiful, charming cities in the world—the skies are now nice and foggy—smoggy, rather—right, which is a real shame, but that's what happens when you make that kind of manufacturing. And according to the Financial Times, hedge funds are facing their steepest margin calls since the 2020—since the 2020 COVID crisis. That's not a minor detail, by the way; it suggests forced liquidations, which would therefore make the whole thing worse and worse and worse. So the extreme sentiment becomes self-reinforcing: Fear leads to selling, which drives prices lower, which triggers margin calls, which forces more selling and causes more fear, and you know it's a vicious circle that can drive markets well below fundamental values.
Now we do have several historical episodes that provide some valuable context for doing that. The most infamous parallel is the Smoot-Hawley Tariff Act of 1930. I know you have it on your bedside table, don't you? Now I want you to pay attention to this bit because the parallels are quite unsettling. Smoot-Hawley raised tariffs on over 20,000 imported goods. The result: Global retaliation and a deepening of the Great Depression through collapsed trade volumes and rising unemployment worldwide. Then we have the Reagan era, the voluntary export restraints of the 80s. These were designed to protect American industries, particularly auto and steel, and the results were kind of mixed. Yeah, they temporarily shielded domestic production, but they simultaneously drove up consumer prices, and interestingly, they eventually led many foreign companies to establish plants directly in the US to bypass the restrictions. So that was the win, but it took a little bit of time. And then more recently, we have Trump's first-term tariffs on 2018 and 19. Many of you will remember this. Initially, we got a lot of disruptions to supply chains; we got some higher input costs, but markets reacted well; they didn't like it, but eventually it included renegotiated trade agreements like the USMCA, and there were some select tariff exemptions that provided some relief. Now Winston, of course, says to me that history might rhyme with what's going on right now, but it isn't, you know, exactly the same thing, and that's just the nature of complex global systems; they adapt. But we can't anticipate what this particular administration is doing. What's the real difference today? It's the scale and the scope—it's so much dramatically larger than anybody expected that it's causing this massive disruption.
And everything I just said sounds a little bit grim, right? But look, I've been through the cycles before. There's something you need to understand: Times of maximum uncertainty are precisely when having a clear and disciplined approach as an investor matters most. You see, there is a lesson here for investors: The market equivalent of a thunderstorm is raging, and your behavior during this period will determine your financial outcomes for years to come. So let me share the investment thesis that we have for this particular environment. And I didn't invent that; I want to be very transparent with you; it's generations before me invented that—the great investors of 20, 30, 40, 50 years ago, some of which are my, been are, and have been my mentors. So this isn't theoretical; it's exactly what I'm implementing in my own portfolio right now. When markets crash, your primary focus—actually, pretty much always your primary focus—should be capital preservation, strategic patience, and maintaining some flexibility. So don't fall in love with stocks; that's not permitted.
So I'm going to give you four actionable components here. First, you're going to want to bolster your cash reserves. This isn't about hiding under the mattress; it's about having some cash on the side to deploy when the time is right. Cash gives you both a safety net during downturns, but it gives you optionality to invest when the genuine opportunities emerge. Warren Buffett is holding $300 billion in cash at the last count; tells you something, right? So I recommend building or reinforcing an emergency fund—3 to 6 months of expenses on the higher end if you've only got one income stream, and maybe on the low end if you've got multiple income streams. And then, beyond that, have a little bit of cash earmarked for future investments. I'm very rarely 100% invested; I usually always have something sitting on the side, and that's also the nature of our system—that things sell themselves at certain profit levels in essence, and therefore there's pretty much always something that just pops itself into cash and realizes some gains. And then, second, review and diversify your portfolio, but not for the sake of doing it, because diversification—it is a buzzword. People say, "Oh, it protects you." Well, I did a little live session on, on, on last weekend with about 3,000 of you where I walked you through that only 4% of stocks make all the money, and the 96% of stocks are complete waste of time. So we don't want to be diversifying for the heck of it. So but when we go from boom land to potential recession, there are certain sectors that I was writing to my, my community about this morning—my mentees about this morning—and that's utilities, consumer staples, and healthcare. That's where I'm looking; that's where I'm fishing. And they provide more stable returns, dividends; they have more robust balance sheets, and that's where the money flows when the going gets a little tough. Now you can, of course, invest in Europe or in Asia and everywhere else, and occasionally I do that, but most of the time I would say the greatest financial market in the world sits in the US—the biggest and the greatest pension funds and hedge funds and funds generally are in the US, and pretty much every top 10 company in the world is American, with very few exceptions. So why make life complicated, right? So generally speaking, invest our money into US stocks. And then third—and someone's obviously going to put in the comment that there is one exception—there are always exceptions, but that's what I'm saying generally. Now third, and this is really crucial, resist panic selling. So you want to maintain a long-term perspective, and selling quality assets during a panic often locks in permanent losses, and you only want to do that if you have a rule when you want to buy back in. Now we've been telling—not telling, but explaining—to our mentees literally for weeks that it's probably a good time to get out of a lot of these things, and many of them have, and I'm getting all these lovely thank you messages from them, which is absolutely brilliant, because they were, they were kind of kicking, right? Nobody enjoys selling stuff; it's kind of the way our mindset's programmed, and now they're like, "This is amazing; I'm on cash. That's down another 20, 30%; like I can buy this cheaper," right? But the way I want you to look at this—and you might want to write this down—the stock market is the only market where things go on sale, and everybody runs out of the store. So focus on the quality of your holdings, not just the current price. And then fourth—be patient and be very selective with new investments. Markets can fall further than people expect, and yes, V-shaped recoveries aren't guarantees, but they will come eventually, but you tend to get fake V's, and then you sort of do a little bit of that, so you don't want to go all in on the beginning of the first V; you're going to, you're going to want to analyze that. So don't try to time the bottom; nobody can even do—nobody can do that, right? So don't buy the dip super aggressively; wait for signs of stabilization. A calming VIX is a good thing, and I'll pull the chart up here for you. This is Inside Trade Vision, which is what I use for all of our data, like we build. Um, and look, I wrote up here: Above 20, when the VIX is above 20, we're panicking; below 20, we're okay. We're at like 53, so, um, that says to you that the market expects a lot more pain. We don't need to be early here; we always want to be a little bit late; that's actually the goal. We want to sell a little bit after the top; we want to buy a little bit after the bottom. Don't aim for the top or the bottom because you'll never hit it. And if you're an investor, not a trader—and I do both—dollar-cost averaging into really high-quality assets. So put a little bit of money in every week or a little bit of money in every month and spread it out over a time period, and obviously that period can be whatever you make it. Say you have, you know, 10K sitting there; you could do it over 10 weeks, or you could go do it over 10 months, whatever. 10 weeks might be better, or 20 weeks if you want to be really conservative, and that's going to feel better because you're not going to put it in and then it drops another 20%; you see what I mean? You're going to be like, "Oh, that's good; it's dropping another 20%; let's put in the rest," right? So this is kind of what we want to look at here: Patience is more profitable than panic. And then fifth—I thought I said it was four points—anyway, there's a fifth; there's a bonus point: Focus relentlessly on quality and financial resilience. So environments like these—not all companies are equal. You want strong balance sheets; you want low debt levels; you want lots of cash reserves; you want good margins; you want free cash flow; and for businesses with those real competitive advantages and essential products—economic moats is what Buffett calls them, right? So companies essentially with pricing power—so if their costs go up, they can just hike up their prices, and you are going to be a sucker and pay it anyway because you really need that stuff, right? Think tobacco, right? Addictive stuff is a great—addiction is a great moat—not the most morally, you know, but yeah, it's a great moat. Now what if we enter a prolonged recession? Does this company have the strength to survive without having to ask its shareholders for extra money? That's where you want to be. And then one more: Stay informed, but also don't watch the news all day; it's just going to make you feel more anxious; it isn't really going to help. If you want to get a little summary, I'll do a live video every day pre-market; just watch the first 15 minutes of that; I'll give you all the news you want to, you want to get. Or you can also go into, to Trade Vision here and just click on, on, on the news thing on the right, right, and it'll give you a nice little summary about volatility, your favorite stocks; you can just sort of jump around; you can open—say you were interested in tech stocks—just open the NASDAQ, and then it'll tell you what's going on here in terms of market performance, what the key drivers are, and at the top here what you can see they're popping out in Trade Vision as well. It also shows you what are the upcoming events for the week; click on that; it'll again show you what are the expectations and so on. Now if you want to dig a little deeper because you're a bit more active in managing your money, you can also look at dark pool data, and again we have that in here. So on the right here, there's a little thing called Darkpool, and that opens this up for you, and you can see live—literally live as the markets open—what the big boys are doing. And I would filter by large premiums, which basically means the largest trades, and then you can scroll down; you can see what they're buying and selling, and obviously red is a lot of selling; that's a lot of selling. Or you could also filter by, you know, a stock that you own or interested in—say Nvidia or something like that—and then you can see, you know, how many trades are bearish, how many, how many are bullish here in the last couple of days. So gives you a real insight into what the big guys are doing in their private exchanges that they're trying to keep from you. Now, and here's one more, and this is really non-negotiable: Don't have margin positions. So don't leverage; don't buy leveraged ETFs or, or, or um, go into margin in your, in your account. It is the one thing that could mean that you will not survive this. If you don't have margin, you'll be fine; if you have margin or leverage, you could wipe everything out that you've worked the last 10, 20, 30, 40 years for. So just don't go there; don't get greedy. Margin is a risky thing; leveraged ETFs are the dumbest instruments in the world, so don't go there. Okay? And similarly, in your personal life, have a look at your debt levels, right? People, people don't pay off their credit cards every month; that's just madness; you're just like, you're just hurting yourself. So look at all those things and, and figure out a way to, to, to do that better, and there's plenty of stuff out there um that helps people get out of debt. I did a podcast with an amazing lady a little while back—probably about a year or two back—on how to get out of debt; you can, you can look that up in our podcasts. Uh, but generally speaking, there's amazing free resources on that, so just, just, just really study that and focus on that because that's what's going to make you, make you safer and, and better here.
Now, after all my warnings, I'm going to tell you: Prepare for opportunities. You got me all freaked out now. Look, a significant market downturn—it's painful; it doesn't feel good, right?—unless you had exit rules at the top, which you don't have right now. But do use this opportunity as a way to learn those. These crashes create massive opportunities to acquire quality assets at a discount. So start making a watch list of some high-quality companies that you'd like to own long term. And then the harder part, of course, is to find out what's an attractive price point here, right? And that's why I share with my students what I do—not because I want them to copy that; that isn't the intention at all—but because they can learn, get an educational experience from seeing me apply the principles, from being—seeing me apply the very rules that we teach. And you want to get those rules for free; just go and watch the masterclass down below: felix.org/getfree. And when we get our favorite assets hitting those prices, we'll just set up automated buy orders, and they'll buy at those prices, not above. So this isn't, as I said, about catching the absolute bottom; it's about acquiring good businesses at good prices with a long-term perspective. But for the moment, keep watching the VIX, my friends, because that is—let me pull it up for you again—that tells you how much fear there is, how much people expect the market to drop by. When that thing shoots up where it is right now, in the '50s, it is not really a safe market, so take that into account; that'll tell you a lot about whether we get some temporary strength—which you might get in the next few days—or whether it's a genuine recovery. And you have a huge advantage over Wall Street: You don't have quarterly performance pressure.
Don't have to beat the market every three months. And you know and understand businesses better than them because they live in some weird little world on, you know, the Upper East Side or somewhere, which is lovely, but you know, they don't see, they don't go to Dollar General, for example, right? Which might be a stock worth looking at if you know the business. So there are things that we, as consumers, see that the analysts on Wall Street don't really experience, and that's really where our advantage always lies. So use this advantage deliberately.
And this isn't a blip. This isn't going to go away as quickly as we thought because Trump is attempting to rewire the entire global trade flow. And I think it's going to go one of two ways: either in about four years, people will say that was the greatest move ever, the greatest bit of, you know, statesmanship and economic policy ever in the history, and people will go, "That was amazing and the US is like on on on on fire in a good way." Or they're going to say, "Um, the lunatics took over the asylum." And, and at the moment, it's kind of hard to see which way it's going to go.
So the man's a negotiator; I mean, that's really what I know about him most. And people often say, "You're pro-Trump or or against Trump." I quite like it when I get accused of both in the same day and in the same video. So keep keep coming with that. I'm not an American; I don't get to vote; I don't particularly care who you guys elect. That's really up to you; I just observe it, I take it as a fact, and I analyze it and see how can I make more money for myself and my family. That's really what it's all about. So I obviously have some opinions on it, but that isn't really what helps you.
So don't get too caught up in your own politics; just look at the data; make decisions based on the data. As long as you do that, you are going to come out of this wonderfully. Um, that's also why I ran that special live class on Saturday where we did like two hours of exactly, you know, how do we pick those quality stocks? How do we pick those top 4% of stocks? Um, and and that was that was super fun and and really really good. Um, it took quite a lot of time to prepare for it, and and now we're preparing for a for the many of you who've asked for mentoring as a um in subsequently, which I'm super excited about as well because we're going to help you get out of this smiling and get out of this going, "Oh my god, I love crashes; can we have another one please?"
So just take this moment to reassess; take the moment to learn; watch the master class; it's down below; it's free; that's be a good place to start. And if you're feeling really really really queasy, just zoom out. Okay, just look at look at the chart of the COVID crash; look at 2020; just see what happened. What goes down must come up; at least if you're in an index; if you're in stocks, it's a little bit different; if you're in individual stock names, it is a little different. You want to look at what they actually are, and if you don't know how to do that, you've probably jumped the gun a little bit, right? You've gone from index fund investing to individual stock picking, but you don't really know why you own the stock, and you kind of realize that in these painful moments.
So use that as your motivation to actually learn what those stocks are all about. Is it a good business? Is it not a good business? And by doing that, you're going to come out of this period—it could take days, it could take weeks, it could take months—um, much much stronger, much much wiser, and most importantly, with skills between the ears that'll help you for the rest of your life, and you can pass them on to your offspring and and everybody else. And and that's what it's about; it's just acquiring a skill once and then just applying it in a disciplined sort of systematic way. If you got some value out of this video, share it with a friend or a golden retriever, and I wish you a beautiful week. Come on in here; come on in. The stock market is not designed for you to win; it's designed to transfer your money to those who understand its true nature. And what if everything you've been told about investing is actually engineered to make you lose?