Advisor who thrived on Black Monday sends warning on tariffs' next victim
They used words like "surreal" and "unsettling," and said there was a sense of impending doom.
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This was Oct. 19, 1987, also known as Black Monday, the largest one-day percentage decline in the history of the Dow Jones Industrial Average.
The massive sell-off resulted in roughly $500 billion in market capitalization vanishing and a lot of mighty scared people.
But Louis Llanes wasn't one of them.
"No, no, no," the portfolio manager and TheStreet Pro contributor insisted. "It got me excited because I actually was at that time more involved with more thinking global macro. You could be short, you could be long, you could be commodities, stocks, bonds, currencies."
Llanes, founder of Wealthnet Investments, LLC and author of The Financial Freedom Blueprint, shared his views about a variety of market-related topics with Chris Versace, lead portfolio manager for TheStreet Pro Portfolio, in the May 15 edition of TheStreet Stocks & Markets Podcast.
"So, I've been in a lot of different areas in the business," he said. "I started off on the sales side, where you're going out and finding clients. And I learned very quickly at that time that many of the incentives at the larger Wall Street firms were not necessarily aligned with making money."
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"We had all the research," he added. "I was, like, this doesn't make sense. I'm in this business to make money."
As far as people who are just coming to the market, Llanes said he sees two types of newer investors.
"One wants to do it themselves, is interested in it, and highly capable of doing it themselves," he said. "Maybe they're an engineer or something like that. Their psychology is different than, say, somebody who's got a job. They're a manager or something like that, and they don't have time for that. You have a different kind of a view on how to do things."
Llanes advises people generally to continue investing based on the long term.
"It depends on how old you are," he said, "but to have more of a longer term view and to have one based on an investment strategy that's based on economics, not on emotion. The biggest problem you get is, for example, let's say you're a doctor, you're going to hear all sorts of things in the operating table or when you're doing whatever."
"And those clients that I have that are in those fields, they tend to have all sorts of things like, hey, 'what do you think of this?'" Llanes added. "They're hearing all these things and people will talk about, all the things that they made money on. Nobody talks about the things that they lose money on."
Remember, he said, "the people who are talking a lot about how much money they made on something probably aren't doing as well as you think they are."
Llanes said that the old adage about letting your profits run and cutting your losses short is probably the most important rule in investing.
"As soon as you know you're wrong, get out," he said. "And if you're not sure, if things are working out in your favor, be a little bit apprehensive or a lot apprehensive to just unload that security."
The conversation turned President Donald Trump's scattergun tariff plan that has gone through several personality changes since the April 2 "Liberation Day" announcement.Llanes said that he expected from the very beginning that tariffs would be rolled back "because it was a shock that came to the system on the approach."
"There's a difference between how the initial communication went to the public on how we were going to deal with tariffs," he said. "Right on its face, we knew it wasn't feasible. So we knew there'd there would be some pulling back."
While Llanes thinks the negotiations will be more on the normal side, the initial approach was good since it got a lot of people talking very quickly, and "the ball is moving a lot faster" now than the traditional country-by-country method.
"So, in terms of as an investor, I think that the biggest thing is that you just have to understand that there's going to be winners and losers in this." he said.
Llanes' said all of the trends are pointing toward interest rates staying higher.
"Nobody really knows how the tariffs are going to work out," he said. "I mean, we're still working through it. The tariffs won't be as inflationary as the alarmists are saying."
Llanes believes the other part of the equation, which will see more investment in the U.S., will continue to increase.
"That will hold up interest rates," he said. "And I think that's going to affect the real fast-growing companies that are way overvalued. They're going to struggle, I believe."
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The current record market cap was set by Apple (AAPL), which notched a $3.915 trillion closing value in December. The iPhone maker's value has dropped since then, as it struggled to catch up to its Big Tech peers on AI and contended with President Trump's threat to hit its overseas-made products with tariffs. Meanwhile, Nvidia's stock has seen a stunning comeback since May: Its most recent quarterly earnings report showed the chipmaker continuing to thrive, despite US restrictions on Chinese use of its chips. The stock has continued to notch fresh record highs since late June. The payrolls report showed more jobs were added in June — a sign that the US labor market was more resilient than anticipated in the final month of the second quarter. But Indeed senior economist Cory Stahle said the report was "not stormproof" and "might not be as solid as it seems on the surface." The job gains were again concentrated in just a few industries, Stahle noted in an analysis out Thursday. Healthcare and social assistance, and state and local government employers accounted for 94% of the total. "The headline job gains and surprising dip in unemployment are undoubtedly good news, but for job seekers outside of healthcare & social assistance, local government, and public education, the gains will likely ring hollow," Stahle wrote. Outside of those industries, employment growth has been "anemic at best", he added, noting the duration of unemployment for the typical unemployed worker seeking a job continues to creep up. "There are real weaknesses in the market — including concentrated job gains, slowing wage growth, and falling participation — that have persisted for months, and there are scant signs of those concerns fading anytime soon," he wrote. Gasoline prices hovered at their lowest level since 2021 heading into the July Fourth holiday, Yahoo Finance's Ines Ferré reports. Read morehere. Meta (META) shares climbed 1.2%, leading the "Magnificent Seven" stocks higher alongside Amazon (AMZN). The gain came after the Facebook parent's stock was upgraded to Hold from an Underperform rating by Needham analyst Laura Martin. Martin cited strength in Meta's labor productivity, measured by free cash flow per full-time employee. "Our upgrade to Hold is driven by our latest labor productivity research that shows that META has had among the strongest labor productivity metrics for the past 4 years," she wrote. In its fiscal year 2024, Meta had a free cash flow of over $730,000 for every full-time employee. That was followed by Apple's $663,457, while the average for big-cap companies covered by Martin was nearly $302,000. Martin said she remained at a Hold rather than a Buy rating partly due to the "uncertain" return on Meta's growing capital expenditures, which have been driven by its investments in AI. Martin said "the larger the spending, the more likely there is waste, in our view." US stocks rose on Thursday morning after a stronger-than-expected June jobs report that showed unemployment ticking down to 4.1%. The S&P 500 (^GSPC) moved up about 0.4%, while the Nasdaq Composite (^IXIC) advanced 0.6%, after both indices closed at fresh record highs on Wednesday. The Dow Jones Industrial Average (^DJI) gained 0.3%. Tech led the gains in stocks Thursday, with Meta (META) and Amazon (AMZN) leading the "Magnificent Seven" Big Tech stocks higher. Meta was up over 2% after an analyst at investing firm Needham upgraded the stock to Hold from Underperform, citing its "strong" labor productivity. A stronger-than-expected June jobs report has traders scaling back bets on when the Federal Reserve will cut interest rates next. Following the report, increasing bets on a July interest rate cut from the Fed reversed. Markets are now pricing in just a 5% chance the central bank lowers rates at its July meeting, down from the 24% odds seen a day prior, per the CME FedWatch Tool. Traders also grew more skeptical of a September move from the Fed. Markets are now pricing in a 78% chance the Fed cuts by the end of its meeting that m, down from a 94% chance seen a day prior. The June jobs report showed the US labor market remained more resilient than anticipated in the final month of the second quarter. The US economy added 147,000 nonfarm payrolls in June, more than the 106,000 expected by economists. The unemployment rate unexpectedly fell to 4.1%. Economists had expected the unemployment rate to move higher, to 4.3%. In May, the US economy added 144,000 jobs while the unemployment held flat at 4.2%. Those figures were revised higher on Friday from a previously reported 139,000 job additions in May. Read more here. Yahoo Finance's Hamza Shaban reports in today's Morning Brief: Read more here. Earnings: No notable earnings releases. Economic data: Nonfarm payrolls (June); Unemployment rate (June); Average hourly earnings; Average weekly hours worked (June); Labor force participation rate (June); Initial jobless claims (week ending June 28); Continuing claims (week ending May 24); Unit labor costs (first quarter final); S&P Global US Composite PMI (June final); ISM Services index (June); Federal Reserve Beige Book released; Durable goods orders (May final) Here are some of the biggest stories you may have missed overnight and early this morning: Investors are all smiles as 'Liberation Day' Part 2 looms June jobs report on deck as Fed rate cut bets heat up House vote moves Trump's megabill toward final vote US lifts chip design curbs on China in sign of thaw OpenAI condemns Robinhood's 'OpenAI tokens' Stock pickers shine, sniffing out value during market tumult Trump aims to shut trade loopholes China uses to evade tariffs Here are some top stocks trending on Yahoo Finance in premarket trading: Datadog, Inc. (DDOG) stock jumped 11% before the bell on Thursday after it was announced it would be joining the S&P 500. Datadog, which makes monitoring and analytic programs, will join the S&P 500 on July 9, replacing Juniper Networks, which was acquired by Hewlett Packard Enterprise. Robinhood (HOOD) stock fell over 1% in premarket trading following OpenAI's statement that Robinhood's sale of 'OpenAI tokens' will not give everyday consumers equity — or stock — in OpenAI, the company said in a post from its official newsroom account on X. Tripadvisor (TRIP) stock rose 6% before the bell following a report that activist investor Starboard Value has taken a stake of more than 9% in the travel review group. UK stocks and bonds bounced back from Wednesday's sharp selloff as Keir Starmer said Rachel Reeves will retain her role as finance minister for many years to come. The British prime minister was attempting to calm speculation about a possible exit of the chancellor of the Exchequer, after he failed to back a tearful Reeves in parliament on Wednesday. The yield on 30-year UK bonds dropped 10 basis points to 5.32%, coming back from a 19 basis point jump on Wednesday. The FTSE 250, which lists UK-focused stocks, moved up 0.5%. US Treasurys were also coming back after getting caught up in the UK gilt turmoil. The benchmark 10-year yield (^TNX) edged down roughly 2 basis points to 4.27% early on Thursday morning, while the 30-year yield (^TYX) slipped to around 4.79%. Bloomberg reports: Read more here. US stock markets will close early on Thursday, July 3, and trading will end at 1 p.m. ET. They will stay shuttered on July 4 for the Independence Day holiday. The stock market will reopen on Monday, July 7, at 9:30 a.m. ET. After that, the remaining holidays in 2025 observed by the New York Stock Exchange and Nasdaq are: Read more here about the 10 stock market holidays in 2025. Software companies Synopsys (SNPS) and Cadence (CDNS) rose in premarket trading by over 5% after the US removed export restrictions on chip design software shipments to China, easing trade tensions between the two countries. China recently made concessions over its rare earth export controls. Synopsys, Cadence and Siemens said they will now restore access for their Chinese customers. These firms develop important electronic design automation tools used in chipmaking. The US also lifted licensing rules for ethane producers. Earlier restrictions were part of Trump's response to China blocking rare earth exports, which had disrupted supply chains for cars, aerospace and defence industries. Reuters reports: Read more here. Oil prices slipped after posting their strongest gain in nearly two weeks, as investors monitored ongoing US trade negotiations and an upcoming OPEC+ meeting this weekend. Bloomberg reports: Brent (BZ=F) traded near $69 a barrel after surging by 3% on Wednesday, with West Texas Intermediate (CL=F) above $67. President Donald Trump said he had struck a trade deal with Vietnam, which would be just the third announced following agreements with the UK and China, before a July 9 deadline to reach accords. Crude has been buffeted in recent weeks, surging and collapsing along with perceived geopolitical risk in the Middle East, although volatility and volumes have fallen in recent days before Friday's US holiday. Focus is returning to trade talks, and the associated tariffs that threaten oil demand, as well as to Sunday's OPEC+ meeting, where the group is widely expected to agree on another bumper increase in supply quotas. 'While trade optimism provided a boost to oil prices, the sustainability of this move will likely be short-lived,' said Warren Patterson, head of commodities strategy for ING Groep NV. 'OPEC+ is set to decide on August output levels this weekend, and so the market will probably be cautious about carrying too much risk into the US long weekend.' Read more here.
