Money Rehab with Nicole Lapin - How Global Crisis Affects Your Investments

Episode Date: October 13, 2023

To help explain how the war in Israel affects you and your money, Nicole calls up Peter Tuchman, broker on the New York Stock Exchange, and host of the Money News Network podcast Trade Like Einstein. Peter and Nicole talk about how the stock market has responded to the attacks in Israel - and more broadly, how you can expect the markets to respond in times of crisis. Subscribe to Peter's show here: https://link.chtbl.com/63Zpqkvs

One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that

I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details.

I love hosting on Airbnb. It's a great way to bring in some extra cash, but I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your

reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Earlier this week, I followed the money trail of terrorism with Mosh Wanunu,

and today I'm following the money trail back to you and your wallet. To help me explain how the war in Israel affects you and your money, I call up Peter Tuchman, broker on the New York Stock Exchange and host of the Money News Network podcast, Trade Like Einstein. Peter has had some surgeries as of late that have affected his vocal cords, but he still did this interview with me because he is such a mensch. Peter and I talk about how the stock market has responded to the attacks and more broadly, how you can expect the markets to respond in times of crisis. I always say that the stock market is like a roller coaster. It goes up, it goes down, just like world events. And knowing how the market responds in times like these can help us all feel a little bit better about staying on the ride. Peter Tuchman, welcome to Money Rehab. Thank you. Thank you. My pleasure to be here. The pleasure is all mine. So, Peter, I had a whole plan for our Eminem episodes this week,

but then the attack on Israel happened. As a fellow Jew, how have you been holding up this week? Being a child of a survivor of the Holocaust, there's no generations in between me and my parents. I grew up with both parents who survived the war, had numbers on their arms. So I grew up with every night at the end of dinner, the tales of their experience there of losing their family, you know, to the gas chambers and whatnot. So it's a big part of my DNA. It's a big part of my life. And my parents were fortunate enough to have met each other, fell in love, came to America, had the most wonderful American dream experience, had a couple of kids, you know, were successful and brought us up to be positive and with no hate in our heart. And even having come from where they came from, they knew that waking up with a positive and

good heart and the way we treat other people is the way we expect to be treated. When there's peace, there's no better feeling. And when there's war, there's no worse feeling. This week, obviously, waking up to that experience was devastating. It's really devastating. And in fact, I'll be honest with you, I tend not to get political on social media because it's yet to have ever served me. There are a lot of trolls out there. There are a lot of haters. And while I'll mostly post things about finance, I'll often post things about family and things that are important to me. But politically, I try and stay out of it. And so I felt absolutely necessary. I'm a firm believer that silence is consistent with non-acceptance of what the reality is going on. And so I posted a post saying that I stand with Israel with a flag. And I wrote some things about the fact that I believe that for

the Palestinians, Hamas is the biggest devil and not the Israelis in so many ways. And I tried to understand that terrorism or unacceptable humanism is the way to go. And obviously, there are people on both sides who have done things incorrectly, but this behavior was unacceptable. And I got over 100 death threats. I had over 1000 DMs that were so hateful and so painful. People who are I thought were my friends, whether they're on the other side of whatever spectrum, it may be religious or political or, or ethnic background, the hate was visceral. It really hurt me to my soul. So I took all of them off. Then I posted a short story because this New York Stock Exchange posted the Israeli flag out front at half-mast.

And I did a short Instagram story saying the Stock Exchange and I stand with Israel. It was devastating, the amount of hate, implying, like very classic anti-Semitism implications are that Jews run the world, Jews run finance. Of course, the Stock Exchange supports Israel. The whole experience has been devastating. Yeah, it's been devastating for me too. And normally I don't jump into political discussions either. I don't find this political. I think that even running a small network or small news organization, we want to be on the right side of history. And I can't imagine looking back during the Holocaust for news organizations

that were silent or people that were silent. I just can't do it. I can't sleep at night, even with all of the hate that I'm seeing. So with that said, how has the stock market been holding up this week? So I think it's important to look at the historic perspective relative to how war has affected markets, right? I mean it's important to look at the historic perspective relative to how war has affected markets, right? I mean, my most recent memory is the Ukraine war. And you know, there are old adages that when there's blood in the streets, the stock market rallies. So what does that mean? The markets don't like uncertainty. And you know, as we saw, I believe it was around January of last year, the month leading into the attack by Russia on Ukraine.

It was a story in the media cycle that was mulling for a while. You know, we all knew that Russia was going to attack and are they going to attack or not and all that. And so it was part of the cycle on a regular basis, probably for a month or so. And it was started to affect the market. The Middle East and Eastern Europe and Russia obviously have major natural resources, oil being the biggest one. And so the impact of a war on the oil markets obviously will net at the end of the day have effect on our oil markets, the commodity markets and the stock exchange and all those stocks, as well as defense stocks. And apparently, how markets react to war, whether it was the Iraqi

wars and 9-11 and other confrontations, global confrontation, that uncertainty and anticipation of a conflict or a war, markets tend to sell off. But when the actual war starts or the attack happens or the crisis begins, markets tend to rally back. And we may judge that and say how cold and ruthless the markets are to react that way, that when the war finally breaks out, they rally, right? But markets don't have emotions that way. The reason is markets don't like uncertainty. And once we know what cards are on the table, that the war is happening, who the players are, and what the future brings, then the markets tend to firm up and tend to rally. And that's happened over history. Can you explain why we also tend to

see gold prices rise during times of uncertainty? So, look, historically, gold is a flight to safety, as it's called, quote unquote. And obviously, before crypto, before Bitcoin, before any of the digital currencies, gold was something that you could always hold. It was very physical. It was a physical asset, right? Obviously, back in the old days, it was tied to the dollar. And now it's just tied to itself. And so at the end of the day, when the world is in a state of uncertainty, crisis, unknowns

and whatnot, holding something that we know will always have some value is where people put their money. whatnot, holding something that we know will always have some value is where people put their money. It's interesting to note, though, now, because we've only had a few crises post the existence of digital currencies. A lot of people thought that crypto was going to be the hedge against the markets selling off. What we found was that's not a fact at all, because we saw that when markets go up, digital crypto goes up. And when markets go down, it goes down. So by no means is it a hedge. You will often see markets go up.

Gold sells off in the other way around when we're at risk, even though we're not seeing a bit of a sell-off here. But when there's a little bit of fear in the marketplace of what's happening in a geo-global sentiment, then people go towards gold. It's something you can sit in your bedroom and hold, it's physical.

It will always have value. And that's what that's about. Hold on to your wallets. Money Rehab will be right back. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees.

If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. Spotme eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in Spotme and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for

details. I love hosting on Airbnb. It's a great way to bring in some extra cash, but I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving-hosts can do what you don't have time for, like managing your reservations,

messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. And now for some more money rehab. Let's talk about oil. So anytime something in the Middle East happens, oil is going to move.

Now, oil is up. What does that mean? Well, look, you have to realize that we have this image of the Middle East. There's a bunch of countries. Israel is small. You know, obviously, the Gaza Strip is smaller. It's surrounded by Egypt and Lebanon and Jordan. It's a small coast. There's also the Arab Emirates, Saudi Arabia and all of that stuff. And there's the Gulf of Hormuz and there's the Suez Canal. And there's, you know, there's the Mediterranean and oil. Once it's excavated from the ground, has to be put on a boat and taken somewhere, whether it's on a tanker or through pipelines.

And those pipelines are all in the basic same neighborhood. And when you have a conflict and when you have a war going on, whether it's in one particular country or it's in a neighborhood, obviously the ability for them to get the oil out, to excavate the oil and explore the oil itself will have an impact on production. We see it when the Saudi Arabians decide, you know, it's a supply and demand story. If the Saudis decide that they're going to cut back, you know, for whatever reason, they're in argument with us or they're playing ball with the Russians or whatever it may be, when they decide to cut back production and there's a limited less supply, the market, the price goes up.

And when there's an oversupply and they decide to flood the market with billions of new barrels, the market, the price obviously goes down. If I have a tanker full of barrels of oil that is worth billions of dollars and there's a war going on anywhere in my path, I'm going to not fill the boat with oil. I'm not going to send my people into harm's way. So it's going to interrupt the distribution we use all the way. Amazingly, as it is, the world uses an incredible amount of oil on a daily basis. And you would think, well, wow, one day, two days of interruption. How how is that going to affect the actual supply and demand of this commodity? But in fact, it does. Okay. And so if the neighborhood where oil is produced and transported to the rest of the world is in a potential crisis and people will be put

in harm's way, it will surely affect the supply and demand and the price of oil. Some personalities like, let's just name names, Jim Craver, are recommending folks look at Israeli defense stocks to play this situation and make money from it. I know you're not in the business of recommending stocks. So let's pivot this toward education for a minute. How can you invest in this sector? Not specifically, but just generally, what should you look at? Okay, I would imagine a lot of your audience watches the show Billions. And obviously, what's his name? Is it Axe? Axe. There you go. A lot of people believe that he made a lot of money

shorting the airline stocks in the show during 9-11. Look, the investment community and the trading community are out there looking for an edge who make some money, whether it's a war, whether it's a crisis, whether it's a supply and demand issue, whether it's a new product, a new story, whatever it is, everybody's out there trying to look for an edge. OK, so how do I benefit from commodities and stock market stock moves in a war situation that's going on right now. Well, you saw that a lot of the Lockheed Martins and the general dynamics and a lot of the defense stocks rallied after the announcement of war on Saturday. Obviously, people trading oil stocks rallied. It got up to 86 and changed because of this potential crunch on supply and demand from this war crisis. Obviously, the Israelis, this is not going to be a short war crisis. Obviously, the Israelis, this is not going to be a short term event. Right. I believe the Israelis are probably going to invade

Gaza, though this is going to be a long term story. You know, this is going to be fire and brimstone. The world will never be the same, in my opinion. I think this is one of these pivotal crises that is going to change the world as we know it. And so it's going to affect I don't know the Israeli stocks, the defense stocks. I don't know much about the Israeli stock market or whether we trade Israeli defense stocks here. But if there are companies that make things that are, whether they are the Golden Dome or they are companies making missiles or tanks.

I remember when I just became a broker and the Iranian-Iraq war started, I ended up getting an order. I worked at Cowan & Company at the time, and I got an order to buy a million shares of Horsco. I had no idea why. And the customer, the broker upstairs, told me to be very aggressive. And back then, it was before the internet. We did not know that, I guess, the war had just been declared or whatever it was.

It turned out that Horscoe made tanks. And so that Cowan, whoever their person was who covered defense stocks, was making a big bet that this was going to be a long-term war and it was going to affect them having to make tons of tanks. And Horscoe was the company that did that. And they were going to get a purchase order for thousands of tanks. And that was going to increase the profitability of that company. Same thing that Jim Cramer would be saying if that's what he said, is that this is going to be a long time, a long term war that Israeli stocks will benefit from this crisis, unfortunately, and from this war. And so that may be a place where some may want to put their money if they want to benefit

financially from this crisis. Look, everybody was down. It's down on Axe on the show, right? Different seasons because apparently he made a big bulk of his money shorting airline stocks after 9-11, right? At the end of the day, it was not the fact that he was a cold, ruthless-hearted human being. He was just a cold, ruthless-hearted investor and trader. He saw an opportunity. He made it. He's not the only one who did it. It happens every day in this market.

There's predatory investing and trading, and there's regular trading. Yeah, but it's not just Israeli defense stocks, right, that are up, like the whole defense sector. I don't even know if I can call it a sector, but a lot of different defense-related stocks. Absolutely. If you listen to the speech by our president yesterday, we are committing arms, we are committing aircraft carriers, we are committing all kinds of weapons and things. And so the companies in the US that make those products are going to get a big purchase order for those products. And so look, stocks go up and down based on profitability and earnings,

right? If you get a big purchase order, whether it's for sneakers, T-shirts or missiles, it's going to make you have a good year. At the end of the day, those companies are going to end up getting a purchase order for missiles or tanks or weapons or whatever it may be, or the components that make these products, right? It's not always the tank or the missile or the boat. It may be the components that are inside or the boat. It may be the components that are inside the weaponry. It may be AI. It may be data centers that control what's going on

around. You know, I mean, the funny thing about stocks is sometimes they're very sector related and product related, but sometimes they're like, you know, there's a company that makes one of the small little components of the iPhone and nobody may not even know. I think the stock is UHS or UHF. For some reason, we saw this stock running years and years ago. Nobody knew what the company was. And it turned out that they were the ones who made one of the small chips inside of the iPhone way back at iPhone one or two. And so, you know, everything we use in our lives are made of components and those components may be made of a commodity, whether it's lithium, cobalt, tungsten, or it may be made of a metal

or whatever. And so if you invest in that product that goes into that product that ends up being used or ordered in a large way, then you're talking about, you know, making some money. I end our episodes, Peter, as you know, by asking all of our guests for a tip listeners can take straight to the bank. What is yours today? You know what? I kind of think it's about not don't get emotional about money. It's not a good trading strategy when everybody is selling something to sell into the major cell. Look, if you look at every crisis we've seen over the last hundred years, they've all been better buying opportunities than selling opportunities.

If you bought in 1987 and you held it, you made good money. If you bought during the 2000 bubble when everything was selling off, you did quite well. If you bought in 2007 when we had the great financial crisis, it took nine years to get back to even, but you net made some money. Took nine years to get back to even, but you net made some money. And obviously, if you bought during the sell-off in March of 2020 during COVID, we were back to even by August 19th, three months later, and we were up 20% and 28% respectively over the next two years. So just never get emotional about trading or investing.

Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Levoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you.

Thank you for listening and for investing in yourself, which is the most important investment you can make.