Episode summary
Dylan Jovine | My 4-Step Risk-Off Strategy for a Market Selloff
Summary
Dylan Jovine argues the market’s sudden risk-off turn is being driven primarily by oil, with crude above $110 a barrel pushing inflation expectations higher and adding drag to the economy. He says the effect is not as powerful as interest rates, but it is the next-most-important pressure because energy underpins nearly everything investors and businesses do.
He frames the market shift as a change in narrative: what had been a growth and AI story is now looking more like a war story and a weaker-economy story. In his view, when the master story changes, the market’s direction can change with it, even if that means a pause, a decline, or a new rally driven by different facts.
Jovine’s response is a four-step playbook. He says investors should sell the most speculative stocks and funds, move proceeds into short-term U.S. Treasury money market funds such as Vanguard Federal Money Market Fund (VMFXX), build a shopping list of high-quality stocks they would like to own cheaper, and stay mentally and financially ready to act if a real selloff creates bargains. He emphasizes keeping calm and using fear as an opportunity rather than reacting emotionally.
Key takeaways
- Jovine says oil above $110 a barrel is the main driver of the current selloff because it raises inflation expectations and slows the economy.
- He believes the market narrative has shifted from growth and AI to war and potential economic weakness, which could change the trend.
- His first move is to sell speculative stocks and funds that do not earn money consistently.
- He recommends parking cash in short-term U.S. government money market funds, citing Vanguard Federal Money Market Fund (VMFXX).
- He wants investors to prepare a shopping list now so they can buy quality stocks cheaply if the market cracks.
Notable quotes
“The price of oil breaks above 110 bucks a barrel. Basically what that does is it creates inflation”
“we've been here before. Those of you guys who've been with me since 2018 know the thing that makes us special is we don't hide under our desk when things get tough”
“Before it was a growth story. it was an AI story. Now it's a war story”
“Step one, sell your most speculative stocks and funds. This is the playbook here”
“Step two, take all that money. Do what I do. Invest it in shortterm treasury funds”
How the episode opens
Good morning. This is Dylan Joven behind the markets. Happy Tuesday.
Today's Tuesday, March 10th. Last week we talked about being in a riskoff kind of mode. Now we know why the market has sold off.
And the primary driver of this selloff and volatility generally is the price of oil. The price of oil breaks above 110 bucks a barrel. Basically what that does is it creates inflation.
It raises the inflation expectation from about 3% which is already high. It's above the Fed's 2% target. Raises it from about 3% to 3.2 or 3.5% depending upon the estimate of the analyst that you're looking at.
And you know what that does is it causes drag on the economy. If you think about the economy like an airplane basically it's like adding ice to the wings or adding weight cargo just makes it harder to fly which really people have less money to spend. People have less money to build out projects.
takes a lot of energy to do that. Very, very expensive stuff. So, we've seen and it's not as powerful as interest rates, the effect oil has on the economy, the price of oil, but it is second place for sure.
Energy, it's the whole thing, right? You can't really do anything without energy. So, the risk off, you see why we've had a risk off.
And look, we've been here before. Those of you guys who've been with me since 2018 know the thing that makes us special is we don't hide under our desk when things get tough. We don't panic.
We keep our cool. We let everybody else in the market start to lose their cool. We take advantage of that.
That's what 35 years of being in this business has taught me. And remember, we break things into two columns.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- risk-off strategy
- oil prices
- inflation expectations
- interest rates
- market selloff
Watch the episode
Watch “Dylan Jovine | My 4-Step Risk-Off Strategy for a Market Selloff” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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