| More Articles | Free Reports | Premium Services Well, he did it… Over the weekend, President Trump slapped tariffs on imports from Canada, Mexico, and China. He said he’ll impose a 25% tariff on Canadian and Mexican goods entering the county and 10% tariff on Chinese imports. He also promised to levy tariffs on goods entering America from the European Union. Canada, Mexico, China, and Europe all said they’d respond with tariffs of their own. The reaction from investors overseas was swift. The Chinese stock market is closed until Wednesday for the Lunar New Year. But Japan’s Nikkei closed 2.7% lower. The Korean Stock Exchange was 2.5% down for the day. And Europe’s benchmark Stoxx Europe 600 index closed down about 1%. Stocks in the U.S. dropped in overnight futures trading. But they pared back those losses after Trump said he’d paused tariffs on Mexican imports for a month to allow for negotiations. What happens next? I’m not sure Trump himself knows. But the postponement of the Mexican tariffs suggests they may be a means to an end rather than an end in themselves. After he hit the country with tariffs, Mexico’s president, Claudia Sheinbaum, promised to send 10,000 troops to the U.S. border to stop drug trafficking from Mexican gangs. Maybe Trump will wring similar concessions from China, Canada, and the E.U. But as I write this, his tariffs on Canada and China remain in place. And so far, there’s no sign of him relenting on his tariff threats against Europe So, today, I’ll lay out the steps to take now to protect your wealth from the fallout of a new trade war. We’ll also look at how you can turn the market volatility it’s kicked off into profits. First, a closer look at why investors reacted so negatively to Trump’s tariff announcements. | Recommended Link | | | | For more than four decades, I’ve been known as one of the world’s most bullish investors. Forbes even went so far as to call me a “perma bull”... But today I’m sharing some dark news… It concerns a financial event that’s about to wreak havoc on the stock market… and catch a lot of people off guard. I can’t in good conscience sit idly by and do nothing right now. A lot of people have their heads buried in the sand. Go here now to see my urgent warning. |  | | Tariffs Are Taxes U.S. Companies Must Pay Tariffs are taxes imposed on goods brought into the U.S. U.S. companies – not companies in Mexico, China, Canada, and Europe – are responsible for paying them. For instance, if a U.S. homebuilder imports lumber from Canada, it must pay a 10% tariff to U.S. Customs before it can use it to build houses. If a restaurant chain buys Tequila from Mexico, it must pay a 25% tariff to U.S. Customs before it can sell it to customers. And so on… To protect their profit margins, the homebuilder and the restaurant chain pass the cost of the tariffs onto consumers. Or they shoulder the costs of the tariffs… and see their profit margins shrink. That’s why, here at The Freeport Society, we’re not a fan of tariffs or any other kind of government taxation. Targeted tariffs and other limits on trade – such as bans on state-of-the-art AI chips to China – may be necessary for defense or security reasons. It doesn’t make sense for the U.S. to send advanced technology to countries looking to weaponize that technology against it. But beyond that, trade should be as free as reasonably possible. After all, the ability to trade freely is an integral part of being able to live freely. Import tariffs make us less free to run our businesses as we see fit. They also make us less free to buy the products we want at a competitive price free of government interference. With that in mind, let’s take a look at why the stock market went into convulsions after Trump’s tariff announcements. Priced for Perfection Two factors drive stock prices over the long term… - Expected future cash flows
- The interest rate investors use to discount those cash flows
The more money a company is expected to generate, the more valuable its stock. But those cash flows don’t exist in a vacuum. Investors have choices. Instead of buying stocks, they could put their money in a high-yield savings account or bonds, which offer safer returns. The higher the interest rates on these alternatives, the less attractive the expected cash flows from stocks become – because investors can earn a solid return without taking on stock market risk. That’s why higher interest rates bring down stock valuations and vice versa. So, to get a read on how tariffs will affect stock prices, we need to answer two questions. How will the tariffs affect expected future cash flows? And what do they mean for interest rates? Barclays bank estimates that the tariffs will reduce U.S. corporate earnings by 2.8%. The truth is we have no idea how much lower U.S. earnings go – it’s too hard to model. But we can be fairly confident they'll be lower than they would have been without the tariffs. How about interest rates? This, too, is impossible to predict with precision. But it stands to reason that tariffs will push inflation higher as imported input prices rise. This will force the Fed to keep rates higher for longer. And that’s a problem for the U.S. stock market that’s priced for perfection. The S&P 500 trades at 30 times earnings. That’s double the long-term average valuation. And it’s higher than at any point outside of the pandemic-induced bubble and the dot-com bubble. The S&P 500 also trades on 3.1 times sales. That’s higher than at any point in history. That doesn’t mean a crash is imminent. But it does mean you want to tread carefully. | Recommended Link | | | | The recent study that showed only 12% of people make a profit on their short-term trades was no surprise to Eric Fry. The Wall Street Legend is a phenomenal trader, but he recommends people avoid short-term trades and instead employ a unique kind of long-term trading vehicle. Eric has used this kind of trade to rack up 29% average gains on every trade recommendation over the last five years, including dozens of 100% and 200% winners. He’s just released a new video that explains why it works, his proprietary strategy, and even how to get his three newest trades. If you’re tired of losing money on short-term trades that don’t go your way, this is a must — watch. Go here now to see this surprising story. |  | | Do This Now to Protect Your Wealth We try to stay level headed here at The Freeport Society. I’m not going to recommend you dump your stocks and hide in a bunker (literally or metaphorically). But now is a good time to take a good, hard look at your portfolio – particularly if you’re in or near retirement. The S&P 500 lost half its value in the dot-com crash that began in 2000. And in 2022, following the bursting of the pandemic bubble, it plunged about 25%. So, consider paring back your winners so that no single stock makes up more than 4% to 5% of your net worth. And if you don’t already use stop losses, now is a great time to start. A stop loss automatically kicks you out of a stock when it reaches a specific price – say, 20% below where you bought in. This limits your losses if stocks take a dive. Also, keep some of your net worth in gold, real estate, and cash. This is a great way to diversify your portfolio and protect your wealth in a bear market. But it’s not all about defensive positioning. There’s an opportunity to grow your wealth, too. Time to Adopt a Trader’s Mentality When volatility kicks up, so do trading profits. Volatility is Wall Street speak for big swings in stock prices. That’s not great if you’re a buy-and-hold investor. But it’s fantastic if you can trade those swings. As Freeport Society cofounder Brian Hunt laid out in his “Age of Chaos” report… Just like a financial crisis breeds opportunity, times of extreme market volatility are great for short-term traders. That’s right… The same volatile, chaotic markets that are terrible for novice investors are fantastic for short-term traders. In fact, times like the 2007-08 financial crisis, the 2000-02 dot-com crash, and the 2020 COVID-19 crisis are like the Super Bowl for short-term traders. During those chaotic times, traders can make the equivalent of 12 years of profits in just 12 months. To great short-term traders, chaotic, volatile markets are times when the sky opens and starts raining gold. So, now is also a great time to set aside some of your portfolio to trade swings in the market. That’s what we do at our Freeport Alpha service. We use sophisticated algorithms to tell us when deep-pocketed investors are taking big positions in certain stocks. Then we buy into those stocks and ride them higher. Right now, for instance, we’re up 12% on Howmet Aerospace (HWM) since we opened that trade last November… up 45% on Ares Management (ARES) since last April… and up 69% on Him and Hers (HIMS) since last October. And as volatility kicks into a higher gear, I expected even bigger gains to come. To life, liberty and the pursuit of wealth, | 
