Chief Investment Strategist, The Freeport Society
Tomorrow is the big one.
Liberation Day.
The day that President Trump will unveil the real substance of his trade policy, including his plan for reciprocal tariffs.
Until now, Trump’s trade levies looked like random warning shots designed to get our attention. Tomorrow, we may finally see a trade plan as comprehensive as the Mar-a-Lago Accord.
Or…
This is all sound and fury signifying nothing.
Ah… to live in the Age of Chaos. A time of extreme change, instability, unpredictability.
It’s unsettling.
It’s also profitable if you know where and how to invest, which is what we aim to help you do here at The Freeport Society.
As much as this chaos makes citizens and investors cower in the corner, we know that fear is our enemy.
We embrace the chaos.
We prepare ourselves to grab any wealth building opportunities these times throw at us.
That’s why today, on the eve of yet another nail biter in the markets, let’s get our investment portfolios ready for whatever Trump throws at us tomorrow.
There are two steps to take while there’s still time…
What We Know and Don’t Know
It’s still not clear what we’re being liberated from.
The tyranny of competitive free trade?
The occupation of affordable imports?
The oppression of high-quality, fuel-efficient Japanese cars or tasty French wines?
What we do know is that Trump is first and foremost a showman. It’s been his schtick since his early days as a New York property mogul and a reality TV star.
So, it shouldn’t be a surprise that he’s keeping us in suspense.
He’s blasted us with mixed messages on what we should expect… lenient tariffs… harsh tariffs… reciprocal tariffs…
Frankly, I’m not sure if Trump himself knows what he intends to say tomorrow.
But it’s safe to assume we’ll hearing something along the following lines:
- Broad, baseline tariffs of between 10% and 20% that will apply to most countries
- New or more tariffs on the countries with the largest trade surpluses with the U.S.: China, the European Union, Japan, South Korea, and our neighbors Canada and Mexico
- “Reciprocal” tariffs that would make regulation, pay differentials, and other non-tariff factors part of the equation
- Sector-specific tariffs, similar to the 25% tariffs on imported autos, steel, and aluminum
- Clarification on “secondary tariffs,” which would mean the U.S. slapping sanctions on countries that import from Trump’s perceived enemies.
For example, Trump has threatened a 25% tariff on any country that buys oil from Venezuela. But would that 25% tariff be stacked on top of existing tariffs? Or would the tariff simply be the higher of the two?
That’s unclear for now but might be clarified tomorrow.
Will We See a Mar-a-Lago Accord Announced?
I also think there is at least an outside chance that Trump uses Liberation Day to announce something far bigger than tariff rates.
Remember, tariffs are a means to an end. That end, in Trump’s mind, is boosting American manufacturing and improving the competitiveness of American exports.
A weaker dollar accomplishes the same thing but without the messiness and the acrimony of an overt trade war.
In 1985, President Reagan addressed what he considered an unsustainable trade deficit by negotiating a controlled devaluation of the dollar relative to the Japanese yen, German deutschmark, and other major world currencies. Dubbed the Plaza Accord, it did indeed lower the trade deficit for a few years.
Will Trump announce a “Mar-a-Lago Accord” in the same vein?
It’s possible.
Trade is also only part of the story here.
Trump also wants a total realignment of the international order. He envisions a world in which you must pay to play. If you want your country to be under America’s defense umbrella, that comes at a cost.
Maybe we’ll hear a hint or two from Trump on this front tomorrow as well.
So how do we prepare?
How to Prepare
It’s hard to know exactly how the market will react, but above all else, the market hates uncertainty.
Even bad news is better than no news. The market prices it in and moves on.
So, I think we’ll see a sort of relief rally tomorrow… once the suspense is over. Even if Trump’s tariffs are worse than expected, the anticipation will be over.
It’s a “sell the rumor, buy the news” moment.
But any rally will likely be short lived.
Recession is looking increasingly likely for this year. The Atlanta Fed’s GDPNow model is projecting that the economy shrank almost 3% in the first quarter.
The past few months of trade uncertainty has made it exceptionally hard for businesses to plan or make new investments. And we’re already seeing the results of this in slower hiring and falling consumer confidence.
Given the chaos out there and the very real possibility of a recession, there are a few portfolio moves you should make.
To start, you should own a little gold.
Already, gold has been a solid investment. It’s risen 17% this year alone. And over the last 10 years, it’s increased by 191%.
In our flagship Freeport Investor advisory model portfolio, we’re sitting on open gains of 53% in our gold holding we initiated in December 2023.
Nothing goes up in a straight line, and given gold’s strong performance this year, it might be due for a brief respite. But the trend remains bullish for this precious metal.
Trump has made it clear that he wants to boost U.S. exports and that a lower dollar is part of that story.
So not owning gold is insane in this environment. If you don’t own gold, you’re not serious about protecting or growing your wealth.
Bitcoin makes sense for the same reasons. We’ve also held a position in Bitcoin since December 2023 in our Freeport Investor model portfolio. We’re on open gains of 104% on this one.
That’s step no. 1: Add gold and Bitcoin to your portfolio… or increase your holdings in both.
Of course, you shouldn’t dump all your stocks. No matter what the market does over the next several months and years, hold onto those blue chip stocks you have.
Gold and Bitcoin should only be a portion of your portfolio.
Step no. 2 is to keep a little more cash on hand than usual.
Sell off some of your non-core holdings… or consider selling a portion of your positions that have grown to become a large percentage of your portfolio.
Let’s say that your “normal” rule is to have no more than about 5% of your portfolio in a single stock but, after years of pushing higher, you own a tech stock or two that has grown to be 10% or more of your nest egg. Well, consider selling half the position to bring it back down to size.
Going into Liberation Day, your goal is to stay nimble. Have dry powder to deploy in the event we get a real buying opportunity.
And remember, embrace the chaos.
To life, liberty, and the pursuit of wealth,
Charles Sizemore
Chief Investment Strategist, The Freeport Society
P.S. While Trump shreds the global trading system by raising tariffs, Argentina’s President Javier Milei is taking the opposite approach. He’s taken a chainsaw to the Argentine state and hacked away at trade restrictions, opening his country for business. Is one approach better than the other? Will either achieve the goals either leader has set? Find out at the Crisis & Opportunity at the End of the World Virtual Summit next Wednesday, April 9. I’ll be speaking from 3 p.m. to 5 p.m. ET. Join me!