This Time Really Is Different, Rick Kahler Warns
This time, it is different.
So argues financial advisor Rick Kahler in an interview with ThinkAdvisor. The chaos in the U.S. economy and securities markets has brought a level of instability that’s unprecedented in our lifetime, he says.
“What worries me is not the flow of the [stock] market. It’s that the foundation of free trade, finance and a free economy is being eroded,” says Kahler, founder and president of Kahler Financial Group.
He cautions that “financial planners need to prepare for a decline in revenue.”
Indeed, smart financial advisors and their clients must be ready for whatever comes, he says. This includes a likely recession.
Everyone needs a healthy emergency fund, and investors should have a highly diversified portfolio with at least 40% of equities in international, Kahler recommends.
The CFP gets his message across in multiple ways. His podcast is called Financial Therapy, and his most recent book is “Coupleship Inc.: From Financial Conflict to Financial Intimacy.”
In the interview with Kahler, who founded his fee-only firm in 1981 and in 2020 became the first Certified Financial Therapist in the United States, he strongly suggests that clients keep a cache of cash at home in case the government limits, for an unknown period, the amount of money they may withdraw from ATMs.
Here are excerpts from our conversation:
THINKADVISOR: What’s your take on what’s going on in the stock market?
RICK KAHLER: When we have a market downturn like this, people think, “It’s different this time.” Well, the circumstances change, but it’s really never different.
But this is different! This is not normal. We have a president that has defied a Supreme Court order. Even his advisors that are for extending the powers of the executive branch said it would be very bad for him not to follow a court order. Well, he hasn’t.
What are the implications?
You have to have a court system that’s respected and followed. We’re seeing the foundation of the rule of law starting to crumble.
Does the market care about that? Oh yes. This is fundamental for the market. So what worries me is not the flow of the market; it’s that the foundation of free trade, finance and a free economy is being eroded.
What are your thoughts about the tariffs that President Donald Trump has imposed?
Certainly I’m in the camp that believes tariffs will do long-term harm. There aren’t a lot of examples where tariffs have fostered sustainable, healthy long-term growth.
But we have a great example of how not having tariffs has created a remarkable economy decade after decade.
Are we facing long-term headwinds for stocks?