Yahoo Finance

Okay, so let's dig into this a little bit, because the worst case scenario at one point were tariffs that were a lot higher, right? That those, you know, the board with all those reciprocal tariffs that the president uh initially uh put up there, and we know we're not getting that scenario. But walk me through what you think is now going to happen that the market is not quite accounting for.

Yeah, so let's just say, I mean, that was the worst that was the known known, right? Okay, here's where tariffs are. And now we're talking about 80% versus 145% on Chinese goods. Um, so what investors aren't thinking about and we're only talking about goods, okay? You know, you have an iPhone, and or you have an Android, I don't know if you're an Android person. But you have your you think of your iPhone, you think of, okay, well, the price might go up on this from $1,000 to $1,400, okay? What you're not thinking about is all of the apps and services you use on a daily basis. Think about all the subscriptions you use. Think about Microsoft Office, for example. So this is super tangible. So the United States is a huge exporter of services. That includes software, that includes consulting, business consulting, that includes legal services, but let's just take Microsoft. Microsoft Excel and Word, what if China puts a tariff and we're talking about uh, let's just say they're paying for Microsoft, what if China puts a tariff of 100 or 300% on Microsoft Office? What if the entire world does that? We're not even talking about that yet. So think about anybody, any firm that is selling their products internationally, especially software firms, any service company that hasn't entered anyone's mindset yet. That is this huge black swan of, well, what if what if services start getting tariffed to the tune of of what we're talking about goods getting tariffed. That that's that's what I'm worried about.

So Skyler, given those unknowns, given those uncertainties and you you sound more cautious here, um how does that inform your investment strategy, your investment decision making? How do you want to be positioned?

Yeah, on the equity side, I would definitely hunker down a little bit more, focus on US-based businesses. If you're going to be exclusively a US-based investor, you have to think about and filter out some companies, a lot of companies that are that have a either A, a tremendous amount of exports internationally, if they're relying on more than 30% of their revenues from offshore, or if they're relying on more than 30% of their inputs from offshore, okay? So what uh what are my alternatives? Maybe looking at like discount retailers, like a TJ Maxx or a Ross Stores, where uh folks might be trading down from a Neiman Marcus or a Nordstrom to um, you know, all like a TJ Maxx or Ross Stores. Also looking at I brought up uh I brought up cell phones, think about a T-Mobile or a Verizon, who is charging customers at subscription, and those are all US-based customers primarily Verizon is. And you know, that I would say is more of of a tariff-proof asset. Then when you look on the fixed income side, you've had this whipping around of the back end of the curve, anything that has interest rate risk has been extremely volatile and extremely risky over the last six weeks. What hasn't been risky is the front end of the curve. And I'm talking about floating rate paper, very short duration paper, um that continues to put up 4 and a quarter to to 5 and a half percent yield, depending on what asset class they're in. But stay short, and you know, if you're a US-based investor and you want to continue to focus on US-based investments, stay local, companies that aren't relying on imports and exports as much as, let's say, a Microsoft might be.