As the US stock (^DJI, ^GSPC, ^IXIC) sell-off intensifies, tastylive founder and CEO Tom Sosnoff joins Wealth host Brad Smith to discuss how to navigate the market downturn.
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Stocks selling off to start the week. The declines fueled by a fresh attack from President Trump against Fed chair Jerome Powell. The president is calling once again for the Fed to cut interest rates. And here to discuss how to manage your investments amid the selloff, we've got Tom Sosnoff who's the founder and CEO of Tasty Live. Tom, good to speak with you once again. I just want to get your reaction to the selloff here, because I've been tracking some of the candlestick activity here and it seemed like the second we saw at least a little bit of a pop or a little bit of some stabilization, that was met with an equal and opposite force still to the downside here. What do you make of all of this today?
Yeah, it's been a, it's been a pretty ugly move Brad. I, I started watching last night when the futures opened at, you know, 5:00 central time. And I think I've been watching straight through till now and they've dropped, you know, a pretty cool 150 handles. That's a, that's a significant selloff. You know, we're, we're wrapped around 3%, um, you know, just from, just from Friday's close till today. So this is where it gets into kind of the, the ugly zone. We haven't not really had an uptick since the opening bell this morning. They've just been drifting lower. And usually you see some kind of cyclicality, some kind of two-sided move, but today, nothing. Just, just grinding down.
So a lot of investors are trying to figure out, "Okay, what do I do with positions that I've established?" Some of them, they might have dollar cost averaged into them well over years, and for some of those other positions maybe they already bought on one of the previous dips that they were told to buy on, and now they're seeing this reversal intensify here. How do you know when to exit a position?
Well, that's a tough thing. I mean, you know, the problem that we, the problem that we have in, in finance and financial media, and, and everywhere is that we encourage people to take a look at, you know, doing something when stocks are going lower. What we really need to do is change the narrative and talk to people about selling into strength when stocks are rallying. Um, right now is probably, you know, if you, if you were looking at it objectively right now, you would, you would probably say, "I'd rather be a buyer at some of these prices than a seller." Um, I mean, for me personally, you know, these are the kind of things, these are the kind of markets where if you're thinking about selling, maybe you back off a little bit, or maybe you sell a little bit. You know, just like it could be 25, it could be 35% of your portfolio if it makes you nervous or uncomfortable. The other thing you can do is, with volatility as high as it is, we're much more comfortable selling some out of the money call against a long stock position to help to improve your basis, and at the same time, you know, just give you a little bit of, we call it delta relief, but give you a little bit of relief of, on your long. But those are all kind of the options. Just maybe sell a call against it, or maybe lighten up a little bit on your stock.
And so Tom, with some of the guests that we've been speaking with here on Yahoo Finance as well, some of the analysts and, and portfolio strategists as well or chief investment strategists that we've had on earlier today, they've been continuing to remind the extent to which this is self-induced because of the action that it, the administration has really kicked off here, and that we've seen with one Truth Social post or one social media post, a lot of that can be the fear or the volatility, some of it can be eradicated but not all of it. And so with that in mind, how do investors best identify what parts of their portfolio are so exposed to that self-induced nature versus other parts that are experiencing something more cyclical that's at play?
It's really hard to differentiate. It's a great question, but it's really hard to differentiate. I would say right now you're looking at a market that has been destabilized by this administration. Whether, it's probably not something that they intended to do, it's probably just, um, a side effect of, of, of, you know, just some, some really poor decision making. So I think unfortunately from an investor's side, we have to look at the current levels of fear and uncertainty and the current level of volatility, which is, you know, up around one of those kind of once a decade levels. We have to look at this opportunistically. If we're going to look at it objectively, we have to look at it opportunistically, which means that if you're in the markets, and if you're an investor, and if you're a risk-taker, I think you have to look at these markets, say, "You know what? I really hate the fact that a single tweet can move the S&Ps by, you know, by two, three, or 5%, but the other side to that is I love the fact that these high levels of implied volatility now essentially mean that the expected move gives us almost asymmetric opportunity if we're right." And what I mean by that is, if, if you think we're oversold, and you think the market has some upside, you're going to have much more, let's call it greater pot odds or asymmetric upside opportunity. And so I think that's the positive side that you have to look at. And you can't think about it as, "Well, I can't time a tweet," you know. So, I think that's the challenge.
Tom, thanks so much for having this conversation with us live, and, and look, we, we had a plan to discuss something totally different, but the market's sell off here and the intensification of it certainly did warrant us keeping everyone informed. We appreciate the time.