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👉 The Worst Week Since 2020

Portfolio Updates, Tariffs, Jobs Report

Together with Betterment

Happy Sunday.

GRIT Money Summit 2025

Special shoutout to the hundreds of you that attended the GRIT Money Summit last Thursday, and the thousands of you who watched online. In case you missed it, here’s a link to watch the replay on YouTube! 

It was incredible to meet so many of you in person! Thank you for joining us, and stay tuned for more events down the road.

TAX TIP: You have until April 15 to contribute to and max out an IRA for 2024. And you might even be able to deduct those contributions on your 2024 tax return.

Portfolio Updates (YTD Performance):

What a crazy week in the markets. From what I can tell, this week went down as one of the worst in history, with the S&P 500 declining -7.9% and the Nasdaq-100 declining -8.5%. The reason for all of this volatility was Trump’s “Liberation Day.” He took the stage and introduced tariffs on countries all around the world — even some where only penguins lived! Haha.

What took the market by surprise were the tariff amounts — with some countries seeing tariffs close to 50%. The tariffs on countries like Vietnam caused athleisure companies like Nike and Lululemon stock prices to fall to multi-year lows as most of their goods are produced there.

There are now countless companies (inside and out of the Magnificent Seven) who are -20%, -30%, -40%, and -60% off their recent all-time highs. If you’ve been following along both this newsletter and my podcast, Rich Habits, this isn’t a surprise to you. We’ve been talking about looming market volatility since December, and “selling the rip” for weeks, and even just two weeks ago I shared how I took major profits across most of my portfolio, shoring up a 14% cash position from zero.

So, where do we go from here? It’s hard to say. I have a feeling we’re oversold and are due for some sort of a relief bounce in the coming days / weeks that will hopefully last longer than the bounce we had from March 13-25 (+5%).

I want to remind everyone there are two types of capitulation — price and time.

When people see their portfolio’s decline dramatically (no matter the time horizon) they get out of the markets (usually marking a macro-bottom in price) — this is defined as price capitulation. There’s always a number where retail investors simply say “I’m not losing any more money, I’m selling everything and getting out.” Historically speaking, this has marked the macro-bottom of recent bear market cycles (especially the bear market we experienced in 2022).

On the other hand, there’s time capitulation. This is when retail investors say “It’s been 22 long months of negative price action, I’m going to sell everything and move it somewhere else.” Obviously 22 is an arbitrary number, sometimes it’s shorter sometimes it’s longer. Regardless, there’s also a time during the bear market cycle where retail investors say “No more waiting around for a rebound, I’m selling everything and moving my money into this instead.”

Both of these capitulations have marked the bottom of market cycles.

Do not try and time this market, both from a price perspective and a time perspective. Traders make money in bull markets, while investors build generational wealth in bear markets. Patience is key. The market can stay irrational longer than you can stay solvent.

You need to build a watchlist of names with rock solid fundamentals operating in secular growth trends. Google is a wonderful example of this — the blue line represents Wall Street’s forward P/E expectations (profits) for the company. The black line is their stock price — which historically follows their profits but is now selling off aggressively.

Fastgraphs

There are dozens of companies that look like this right now. It’s up to us to find them, build positions in them, and then wait 18-24 months for the stock market to realize what a mistake it was to sell off so aggressively and begin bidding these names back up.

This is exactly what I did in 2022 as the stock market sold Meta down to $90 / share — my average cost of Meta stock in one of my retirement accounts is $151.

The market sold off Meta further than it should have in 2022, just like it bid the price up higher than it should have in 2025. It’s up to us to find these companies, buy them when the market overreacts, hold them for 18-24 months until the market figures out the mistake it made — then we make money as the market “equalizes” back to normal valuations.

Fastgraphs

My year-to-date returns in my stock portfolio sit at -13.0%, compared to the S&P 500’s -12.5% as shown above. The Dividend Growth Stocks section is holding up nice, down only -9.0%, as is the Long Risky section — down only -9.1%. The bulk of the downside is coming from the Long Technology section which is essentially the Magnificent Seven.

Shoutout to Uncle Warren for being +5.6% in the green YTD, helping me stay afloat! Other green names YTD include Kroger, Verizon, and Celsius.

Bitcoin is holding strong, hovering around the $80K range. Ethereum continues to kick my butt, however, I’m holding strong.

My biggest piece of advice to anyone reading this right now who’s feeling stressed and sad — zoom out. The markets move in cycles, both to the upside and to the downside, while trending higher over time. We’re entering a “downside” cycle — which means if you’re a long-term investor like me you’re getting an incredible opportunity to buy shares of stocks at immense discounts to their intrinsic value.

Have a plan, automate your investing, and forget about the day to day movement.

Week in Review —TLDR:

Wall Street lowered their price target on Restoration Hardware by -68% after Trump's tariff announcement ($410 to $130), the tariffs turned out to be calculated based on trade deficits, Tesla’s deliveries sank last month, OpenAI reached a valuation of $300B, Jerome Powell is seeking more clarity before making any moves, and the U.S. Jobs Report resulted in mixed feelings.

Key Earnings Announcements:

Wall Street lowered their price target on Restoration Hardware by -68% after Trump's tariff announcement ($410 to $130).

  • Restoration Hardware (RH):

Key Metrics

Revenue: $812.4 million, an increase of +10% YoY

Operating Income: $70.3 million, an increase of +9% YoY

Profits: $13.9 million, an increase of +23% YoY

Earnings Release Callout

“The important work and substantial investments we’ve made over the past two years are now resulting in meaningful share gains and significant strategic separation, positioning the RH brand to expand its leadership position across the luxury home market over the next decade.

While we expect a higher risk business environment this year due to the uncertainty caused by tariffs, market volatility and inflation risk, we believe it’s important to separate the signal from the noise. The fact is, we’ve been operating in the worst housing market in almost 50 years. Despite that fact, we are performing at a level most would expect in a robust housing market.”

My Takeaway

This was a nightmare week for RH. Following materially higher-than-expected global tariffs by the Trump Administration, Wall Street has downgraded RH to Underperform and lowered their price target from $410 to $130 — citing three key risks:

1) Significantly higher friction for inventory sourcing as well as margin deterioration.

2) High potential for industry-wide demand destruction, including negative wealth effects on RH’s affluent customer base from pressure on the equity markets YTD.

3) Lower free cash flow and increased net leverage. Tariffs could end up lower, but the near-to-medium term impact likely makes 2025 EBITDA guidance of 20% margins unachievable.

RH reported $2.6B of net debt to end fiscal year 2024 — this includes $30M of cash. 2025 free cash flow expectations are now around the $200M range, aided by $200-300M of “excess” inventory. Wall Street isn’t calling for near-term liquidity issues, but the cost of refinancing $2B+ of debt in 2028 is now an even bigger risk to the business.

According to the Q4 report, the company paid $230M in interest on their $2.6B of debt throughout all of 2024. During the same period of time, the company generated $322M in operating income. This math ain’t mathing.

No shares.

Investor Events / Global Affairs:

The tariffs turned out to be calculated based on trade deficits, Tesla’s deliveries sank last month, and OpenAI reached a valuation of $300B.

  • Your Full Tariff Breakdown After “Liberation Day”

On “Liberation Day” last week, the Trump administration announced sweeping tariffs, including a universal 10% tariff on all imports starting April 5 and country-specific tariffs up to 50% beginning April 9. These measures are framed as both a response to unfair trade practices and a revenue tool to fund upcoming tax cuts. While Canada and Mexico are mostly exempt, 57 countries face targeted tariffs — which were calculated based on U.S. trade deficits rather than actual trade barriers.

The administration argues these tariffs will re-industrialize America and strengthen national security, but critics are passionately pointing to automation and service-sector growth as the real causes of manufacturing decline. Economic modeling shows the tariffs could raise +$600 billion annually but at the cost of reducing U.S. GDP by -1% and increasing prices by up to +9.5%.

Real wages are expected to fall, with lower-income households hit hardest due to the regressive nature of consumption taxes. Some exemptions apply, including for USMCA-compliant goods and certain strategic sectors like semiconductors and pharmaceuticals. Tariffs may stack with existing ones, potentially pushing total rates on some goods, such as Chinese imports, close to 80%. As we’ve mentioned and you’ve likely seen all over social media — the market is eagerly waiting for any tariff updates from world powers. China has already retaliated by adding a 34% tax on all U.S. imports beginning next week.

“In a statement published Wednesday night to explain its methodology for tariffs that rocked the globe, the United States Trade Representative detailed a formula that divides a country’s trade surplus with the US by its total exports, based on data from the US Census Bureau for 2024. And then that number was divided by two, producing the “discounted” rate.

China, for instance, had a trade surplus of $295 billion with the US last year on total exports of $438 billion — a ratio of 68%. Divided by two according to Trump’s formula, that yielded a tariff rate of 34%.”

— Josh Wingrove, Bloomberg
  • Tesla Deliveries Sank

Bloomberg

Tesla’s vehicle sales fell -13% in Q1 2025 to 336,681 units, the lowest since mid-2022 and well below analyst expectations. The drop was partly due to factory retooling for the redesigned Model Y, but also a result of growing global protests against Elon Musk’s political activities, including support from far-right figures and involvement in U.S. and European politics. The "Tesla Takedown" movement has been organizing demonstrations and encouraging people to divest from Tesla.

Tesla’s market share is slipping, especially in Europe and China, where rivals like BYD are surging. Despite the downturn, Tesla’s energy business showed strong growth, with storage deployments up +154% year-over-year. Investors are now looking toward upcoming product launches, including robotaxis and lower-cost vehicles, as potential turning points for the company.

“While the crummy Q1 results were widely telegraphed, and while journalists are seizing on the opportunity to write about arson, we think the investing community risks losing sight of Tesla’s upcoming product unveilings.”

— Alexander Potter, Analyst at Piper Sandler
  • OpenAI’s $300B Valuation

Jakub Porzycki / Nurphoto / Getty Images

OpenAI has raised up to $40 billion in funding — led by SoftBank —bringing its valuation to $300 billion. The funding will support advancements in AI research, infrastructure expansion, and enhanced tools for its 500 million weekly ChatGPT users. However, OpenAI must convert into a for-profit company by the end of 2025 (or early 2026 in some cases) to receive the full investment.

SoftBank has made an initial $10 billion payment and plans to syndicate another $10 billion to co-investors. This follows January’s announcement of a joint venture between Oracle and other companies to invest up to $500 billion in U.S.-based AI infrastructure.

“[This new capital] enables us to push the frontiers of AI research even further, scale our compute infrastructure, and deliver increasingly powerful tools for the 500 million people who use ChatGPT every week… We’re excited to be working in partnership with SoftBank Group — few companies understand how to scale transformative technology like they do.”

— OpenAI Press Release

Major Economic Events:

Jerome Powell is seeking more clarity before making any moves, and the U.S. Jobs Report resulted in mixed feelings.

  • Jerome Powell’s Comments

Getty Images

Federal Reserve Chair Jerome Powell warned that larger-than-expected tariffs are likely to cause higher and potentially persistent inflation, along with slower economic growth. His comments signal that the Fed is unlikely to cut interest rates soon, despite market volatility and pressure from President Trump. Just before Powell’s speech, Trump demanded rate cuts on social media, accusing Powell of playing politics.

Powell emphasized that the Fed will wait for more clarity before adjusting policy, given the elevated uncertainty. While markets are pricing in rate cuts, Powell’s remarks suggest the Fed is more concerned about long-term inflation expectations. The central bank’s priority is to prevent temporary price increases from becoming a sustained inflation issue. This stance has set up renewed friction between Trump and the Fed as economic risks rise.

Despite these inflation concerns, Truflation’s real-time US inflation gauge has moved down to +1.2%, the lowest level since November 2020. I believe we will see 3 or more rate cuts this year after digesting everything that’s taken place.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem… We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.”

— Fed Chair Jerome Powell
  • Jobs Report & Unemployment

U.S. nonfarm payrolls rose by +228,000 in March, beating expectations and showing continued labor market strength, particularly in health care, which added +54,000 jobs.
Despite the job gains, the unemployment rate ticked up to 4.2% as more people entered the labor force. Average hourly earnings rose +0.3% for the month and +3.8% year-over-year — the lowest annual increase since July 2024.

January and February job figures were revised downward, softening the strong headline number. Markets showed muted reaction to the report, with investor focus shifting toward concerns over President Trump’s new 10% tariff policy and the threat of a trade war. Federal employment fell slightly by -4,000 — despite broader cuts associated with Elon Musk’s DOGE initiatives. While the report signals continued job growth, experts caution that it reflects past conditions and may not account for upcoming economic uncertainty tied to trade tensions.

“Today’s better than expected jobs report will help ease fears of an immediate softening in the US labor market… However, this number has become a side dish with the market just focusing on the entrée: tariffs.”

— Lindsay Rosner, Head of Multi-Sector Fixed Income Investing at Goldman Sachs Asset Management

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