Scott Kahan: Drown Out the Political Noise from Your Portfolio
Scott Kahan, Certified Financial Planner ™ professional and President of Financial Asset Management Corp. in Chappaqua and NYC, discusses the importance of drowning out political noise from your investment decisions.
Are we coming down from the shock waves of the new Trump administration?
The VIX has. My clients—not so much.
Let’s start with the VIX…
For those not familiar with the VIX or Volatility Index, it is a barometer on market volatility measured by the Chicago Board Options Exchange (CBOE). It’s sometimes referred to as the “fear gauge.” It doesn’t measure past price swings but expected swings implied by S&P options trading activity.
As it relates to VIX action this past spring, in layman’s terms, “What is Trump going to say next?” And more specifically what is he going to say about tariffs.
I hate to relive the recent past in the markets, but can you take us through it?
So, the day after the Trump inauguration, the VIX closed at 15.06—a hair under its 2024 average. On the morning of “Liberation Day,” the day he announced his tariff plans the VIX had already risen to 21.5. Twenty-four hours after the market had time to digest Trump’s news, the VIX jumped to 30 and rose to 52 by April 8.
Hair on fire…
In the wake of Liberation Day, the S&P 500 dropped from 6148 to 4982 almost 20%. A major correction.
And now?
After Trump backed down and paused the tariffs for 90 days the S&P regained all it lost and just closed at 6280-record territory. Meanwhile the VIX has dropped to 16.
But your clients are not over it yet?
Many of my clients have not even looked at their portfolios in months and are pleasantly surprised when they see where they are today. But they’re still jumpy. And the market is too, although people now call him TACO Trump—meaning he “chickens out” of his threats—my clients still get unnerved when he talks tariffs. As does, the market. It still reacts to tariff threats but not as much.
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