Thinking Through the Storm: Uncertainty, Risk and Strategy
- Blanc
- Apr 6
- 6 min read
Mine was a lot to take in. As I’m writing this post, the Dow is down another 1,000 points in premarket trading, hinting that Monday might be another tough day.
When I look at my grocery bill, clothes, appliances, even my kid’s college tuition — all poised to rise 10–20% — while paychecks aren’t keeping up and job security feels less certain.
This weekend, I gave myself some space to read, reflect, and map out my next move. I’d love to share a few articles and interviews I found insightful. Maybe they’ll help you think through yours, too.
The Big Questions I discussed with my girlfriends this weekend are:
Is it too late to move assets?
Is the market bottom in?
Before answering, we need to revisit where we are in this policy cycle. (I mentioned this in my previous post: Policy Shifts, Market Moves, and When to Shelter)
The cycle generally looks like this:
Policy announcement
Implementation
Economic impact
Policy adjustment
Now that the framework is announced, JPMorgan’s Michael Cembalest believes policy uncertainty has peaked. According to him, the next targets will be tax cuts and deregulation. The Fed will likely start easing soon — meaning lower interest rates and pumping more money into the market by buying Treasury bonds. In other words, the worst of the bad news might be behind us, and some good news could be on the way.
Cembalest also suggests that historically, after the market falls around 15%, it’s a good time to start getting back in — slowly, using a daily average investment approach.
By the way, Michael Cembalest is one of my favorite economists — smart, sharp, and great at connecting data to what’s really happening in the world. I’ve also attached his full note at the end of this pos
Where I Agree… and Where I Don’t
Yes, tariff uncertainty may have peaked. But there’s still a lot of other uncertainty ahead.
How will Europe react? Could there be even more tariffs on Canada and Mexico too?
Will Trump actually cut tariffs in deals with countries like Vietnam? Maybe a tiny cut (“haircut”), but a full rollback seems very unlikely.
Even if Vietnam gives in, the bigger goal is to block all the backdoor supply routes — the administration needs to keep the tariff system strong after wiping out $5.4 trillion from the stock market.
And beyond tariffs:
Will U.S. oil companies ramp up drilling if OPEC lifts production amid looming recession fears? (Remember when oil went to zero in 2020?)
Will manufacturers really bring production back to the U.S. while they are not sure how long the policy will stay, how much their supply line price will go out and how much labor cost or land cost can move up if there’s a demand shock
Will consumers keep spending on non-essentials when grocery bills are soaring and job security is shaky?
The tariff policy uncertainty may have peaked. The next biggest uncertainty is how EU wilL response and anymore tariff toward Canada and Mexico. Will Trump roll back his tariff, like what’s in report that Vietnam is conceding with zero tariff in exchange to a lower tariff rate? Maybe a hair cut, but major roll back from Vietnam? Not very likely. The spectrum of tariff, including 30% tariff on the smallest island Nation Nauru is to prevent loop hole. The production jumping from one country to another. The panic market reaction is telling the administration that his calculation has successfully cut off all the alternative mid-way country. If he spares Vietnam, his beautiful plan wont work. Who will allow any chance that the tariff is less effective after wiping out the the market 5.4 Trillion.
But besides the tariff uncertainty, what’s the other uncertainty ahead?
A lot!
Will the oil company start pumping oil like drill baby drill if OPEC is lifting their production and seeing recession to come? We forgot about when oil price drop to zero in 2020? The cost of product is about $55 per barrel and now we are at $62.
Will even a furniture factory move production back to U.S. if policy could shift again in 4 years, plus they don’t know whether lumber price will increase, labor cost will increase, land price will increase?
Will you spending more money on your clothes, furniture, bags if you know your grocery bill will increase 10% and other things will increase even more while your paycheck is unchanged, or even worry about your job security?
More important, Capital
Let me quote an article from Bloomberg’s John Authers.
What Are We Scared Of?
The greatest issue concerns the dollar. Relative to the rest of the world, US assets have boomed ever since the Global Financial Crisis and went into overdrive after the pandemic stimulus programs in 2020. At that point, America let the liquidity flow, and attracted massive flows from other countries into its stock market. Following Julian Brigden of MI2 Partners, you could call this“vendor financing.”
The growth in European holdings of US stocks has been breathtaking. From 4 trillion in 2020 to over $9 trillion. Put it into relevance, in 2024 Q4, our current account deficit (includes both goods and services are $310.3 billion. Capital move is much faster and easier, imagine only 10% of the capital is leaving us for “diversification” purpose. We saw that happened when Deepseek challenged ChapGPT’s algorithm and Cost. How much more money treasury has to pump into the capital market to fill the void and the depereication of dollar will accelerate the circle of capital outflow. Unlike China, we don’t control currency exchange, we are running at the assumption that everyone would love to hold dollar as reserve currency.
Market
So even the tariff policy uncertainty is peaked, the macro economic environment is not peaked.
Looking at the S&P 500 P/E ratio in the past 20 years, our current P/E is above 24 and usually after the crisis, it dropped back down below 20, naturally, with lower earning expectation
So is it time to buy?
Oaktree Capital’s Howard Marks was asked recently whether it’s time to be fearful or greedy. His answer:
“You need to know whether asset prices are fair, excessive, or inadequate.”
Right now, it’s very hard to tell.
The environment is harder to predict than anything we’ve seen in decades.
Last but not least, I would like to quote another Bloomberg article, called Trump was Just a Catalyst for the Inevitable
This brings us neatly to the US stock market, where the correction blamed on Trump is just a function of valuation reality. The market has long been far too concentrated and far too expensive (it’s only been more expensive twice in the last 35 years: 1999 and 2021). If it were true—as once was thought—that the US would be the winner in everything from artificial intelligence to electric vehicles, space and every other kind of technology maybe, that would have been ok.
But the arrival of DeepSeek, which suggests AI can be cheaper and more ubiquitous than previously thought, plus more recently the news of BYD’s ultra-fast battery charger, knock that idea on its head. The new China is not just hugely innovative, but very investible (see next week’s podcast with Man Group’s Ed Cole for more on this). It’s a reminder that, despite the headlines, not everything is about Trump. He is a catalyst, not a cause.”
When we talk about disruption, we also need to step back and think about how we got here — and what the real issues are in our economy.
I hope this isn’t just a moment of disruption, but a catalyst for real change.
America has proven time and again that we are the most resilient country in the world — we’ve always been able to rebuild from the ashes.
Why?
Because of our democracy, our institutions, our rule of law.
We were the first nation founded without a king — and democracy has been in our DNA from the very beginning.
As long as we protect this most valuable asset, we will find ways to adapt.
We can overcome higher labor costs with robotics, with deregulation, with innovation.
And when we reopen to the world again — and I believe we will — we’ll have a stronger, more balanced economy ahead of us.
Now back to the questions from the beginning:
Is it too late to move assets?
Is the market bottom in?
Here’s my choice — a balanced approach:
I have moved some assets out already. Now, I’m starting to invest back in — slowly. And I mean really slowly.
If you still believe in the U.S. market, history shows it eventually recovers — we have over 100 years of proof.
But no one knows exactly where the bottom is.
Averaging in (daily or monthly) has proven to be one of the best strategies in this kind of environment.
Could the market drop another 10%? Absolutely.
Could we even trigger a financial crisis? Likely if stock market trigger global asset redistribution.
But self-inflicted wounds can also heal fast — and the faster, the better.
If your portfolio is already down about 10%, and you can leave it alone for the next 10 years, think carefully before trying to time the market. Timing it wrong could hurt even more.
I’m not betting the market will keep falling, and I’m not betting it’ll bounce back right away either. Simply because — I don’t know when the next big news will hit, and I don’t want to risk extra losses guessing.
Right now, I’m keeping it simple: holding onto good assets, cutting down debt, and reducing spending. Being conservative with your finances will help you weather the storm.
And when the skies clear, you’ll be glad you stayed strong.
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