What caught my eye this week.
A long-time Monevator reader asked me this week why we haven’t written something in the vein of the Covid crisis Do Not Sell special that inspired a thousand (okay, four) T-Shirts?
The quick answer is – as my co-blogger The Accumulator said on that day in March 2020 – we don’t like to get involved in day-to-day market commentary. Especially not for passive investors.
This isn’t just because we don’t think we have much insight into where the market will go next.
(No great humility on our part, we think almost nobody has that edge).
Rather it’s also because we believe it’s unhelpful for most people to try to make the market timing decisions that thinking you know better can inspire.
Calm tweaks to allocations decided on a Sunday morning when the markets are closed are one thing.
Dumping half your stocks on Monday because a man on YouTube is shouting: very different.
Chronic disability
But there’s a more difficult explanation as to why this isn’t a Covid crash moment to my mind.
In short some of the drivers of this US sell-off are arguably more serious than a global pandemic. At least from an investing perspective, but maybe on a long-term human history view, too.
That’s because something is happening in the US that I don’t think we can dismiss as business-as-usual.
True, it’s too soon to know what America apparently going rogue will mean for geopolitics and trade.
And for sure if after all the shouting we just have a bit more defence spending in Europe, some self-defeating but limited tariffs, and an even more winner-takes-all society in the US, that’s hardly existential.
But if this does escalate into a 1930s-style tit-for-tat global trade war then we can probably look forward to a deep recession, if not a depression.
And that’s to say nothing of the obvious threats to stability of a truly disintegrating global order, if that came about too.
The nukes haven’t gone anywhere.
No vaccination against economic illiteracy
So how should markets price in all this?
Probably much as they are is my best guess. The declines seem pretty orderly to me.
That might sound odd after one of the fastest circa 10% corrections in US stock market history – and against a cacophony of ‘hold the lines!’ from US commentators that mostly make things feel worse.
But we could expect a lot worse given the potential lasting damage to growth and cooperation that we’d see from a Trump administration that truly did what it’s saying it’s going to do.
Without wanting to re-litigate every turn of the pandemic, once it was clear that most people recovered from infection and that the oldest were the most vulnerable, it was always likely to end relatively quickly.
We had a ton of medical history to show that.
Millions might die – did die – and the upheaval could have – is having – long-term social and political consequences. But global productivity didn’t have to be indefinitely impaired.
However that’s not true of destructive nationalistic trade wars.
The global economy will surely become less efficient. And nationalism goes hand-in-hand with conflict.
I hardly need to state the worst cases from the last century to demonstrate where this could lead.
Do not sell. Probably.
Of course most people shouldn’t sell on this escalating drama.
But that’s because a strategy of regularly trying to make such decisions will probably reduce your long-term returns, due to poor trading decisions.
It’s not because hindsight won’t show us that selling this particular time and buying back in one, five, or ten years time wasn’t retrospectively the right move.
However if you have that kind of foresight, you probably already know about it. But nearly everyone doesn’t. And nobody is even close to perfect.
(Spoiler alert: the shouting bloke on YouTube doesn’t make the grade.)
Never-ending stories
Remember too that – as always – there’s a confluence of factors behind this recent sell-off.
China unveiling of its supposedly el cheapo DeepSeek AI innovation has blown the froth off the largest US tech firms. These had become such an enormous share of the market – as discussed here and elsewhere – that even small de-ratings have huge consequences on the index level.
Then there’s the US exceptionalism story that was at its height by the end of 2024.
This basically boiled down to ‘US stocks go up the most because US stocks have gone up the most’.
I’m serious!
I could write a fancy treatise about capital going to where it’s treated best or the European regulatory burden, the privilege of having the world’s reserve currency, or the role of Silicon Valley VCs and high-skilled immigration in keeping North America on the cutting-edge.
But honestly, from a market perspective I think US stocks went up a lot for a very long time and that this probably sucked in too much money in the expectation of even more.
Whereas now investors are slashing their US holdings by the most ever, according to Bank of America.
Money is piling into a fiscally-emboldened Germany as it reportedly flees the US.
Global fund managers are even – pass the smelling salts – putting more money into the UK.
Finally, if we take Trump and Elon Musk at their word (you do you) then the US has embarked on an enormous shrinking of the state, ultimately in an effort to reduce its vast deficit and national debt.
Compare that with Germany – finally taking the spending brakes off – and you could paint everything we’re seeing as yet another QE/fiscal story. Capital leaving a retrenching US to go where money is getting easier in Germany.
Crashing bore
Could the US fall to proper bear market levels? Could it be down 20-30% by next year?
Yes, I think that’s quite possible.
But then again, it’s always possible. No need to send me a prize if it happens.
It’s nothing likely a certainty, however. And in some ways improbable.
American household and company balance sheets are in good shape. Meanwhile the US Central Bank has shown little stomach for deep drawdowns, so we could expect some kind of emergency rate-cut package to take the edge off any falls.
And this is not to even get into exactly what the US administration will do, versus how much is noise.
Trump is such a chaos agent, you could even argue his reputation has made this latest drawdown more orderly than it would be under a traditional US leader with a similar trade agenda.
While the enthusiasm for US tech stocks, say, got very giddy, I doubt hedge funds and other massive pools of capital went all-in on business as usual following Trump’s election last November.
Which in turn implies such institutions wouldn’t have gone overboard with leverage and the like, either.
It was perhaps telling that Bill Ackman said in his recent Pershing Square report that the fund didn’t put on any of the asymmetric bets that have made it billions previously. For Ackman’s taste the options and other securities Pershing Square uses to put on those trades never got cheap enough.
Which might tell us markets, perhaps surprisingly, weren’t overly-complacent about risk in 2024 after all.
Reinvigorating reading
We’re now going deep into the weeds for the tastes of most readers, though. So I’ll conclude with three good articles on the recent wobble.
They are well worth a read if you’re anxious:
- The price of admission – Charlie Bilello
- A correction, not a crisis – Optimistic Callie
- If equity markets didn’t fall as much their returns would be lower – Behavioural Investment
Have a great weekend!
From Monevator
What is the UK safe withdrawal rate? – Monevator
How to waste money – Monevator
From the archive-ator: Monevator is an investment site, whatever the weather – Monevator
News
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Bank of England holds its rate at 4.5% amid trade war uncertainty – Sky
Record demand for gilts from retail buyers affecting prices – Proactive Investors
With more than 300,000 Londoners classed as too sick to work… – Standard
…and more than a fifth of UK adults not looking for work… – BBC
…Reeves set to unveil biggest spending cuts since austerity – Guardian
Flawed revision wipes £2 trillion off estimates of UK household wealth – IFS
London closes in on New York as the top financial centre – CityAM
US offices still barely above half of pre-pandemic occupancy levels – Apollo
Number of buy-to-let companies passes 400,000 – This Is Money
UK and US hit new lows in World Happiness Report – Axios
Brexit a key factor in worse UK medicine shortages in four years – Guardian
Why has the price of gold risen so much? – Econofact
Products and services
Half a million homes in conveyancing ‘log-jam’ ahead of stamp duty hike – This Is Money
£5,000 cashback mortgages to offset stamp duty hike – This Is Money
Joint-life annuity rates at 17-year high [Search result] – FT
Get up to £1,500 cashback when you transfer your cash and/or investments through this link. Terms apply – Charles Stanley
Rates tumble on instant-access savings accounts – Which
What the new rules on pension inheritance may mean for you – Guardian
Is it cheaper to renew move at the end of your rental contract? – Which
Get up to £4,000 when you transfer your ISA to InvestEngine our link. (Minimum deposit of £100, other T&Cs apply. Capital at risk) – InvestEngine
Can you pay less on your council tax? – Be Clever With Your Cash
Six ways to capitalise on the bust in luxury watch prices – Forbes
Be the sharpest in your hood with a Monevator hoody – Shop
Four Barn conversions for sale, in pictures – Guardian
Comment and opinion
The madness of the £100,000 childcare tax trap [Search result] – FT
Buy, borrow, die: how US billionaires avoid taxes – The Atlantic
The secret to happiness? Doing pretty okay, I guess – Sherwood
Europe’s fiscal splurge could herald a decade-long bull market – Reuters
Navigating your finances in your 40s – Flyover Stocks
What’s in the centre of your portfolio? – A Teachable Moment
How to approach liquid alternatives in your portfolio – Morningstar
Yet another study showing the many ways active funds fail investors – Morningstar
How much do Gen Z and millennials save compared to Gen X? – This Is Money
Naughty corner: Active antics
Ten best-value stocks to buy for the long-term – Morningstar
Retail investors take on hedge funds in Europe’s answer to meme stock mania [Search result] – FT
Buffett and Munger Unscripted… – The Rational Walk
…and Buffett’s Early Investments – Enterprising Investor
Kindle book bargains
Poor Charlie’s Almanack by Charlie Munger – £0.99 on Kindle
How to Run Britain by Robert Peston and Kishan Koria – £0.99 on Kindle
Invisible Women by Caroline Criado Perez – £0.99 on Kindle
Chip War by Chris Miller – £1.99 on Kindle
Environmental factors
Carbon dioxide levels in atmosphere highest for 800,000 years – Yale
The fish collectors hoping to save rare species from extinction – CNN
Defra asks England’s biggest landowners how they’ll restore nature – Guardian
Is any nation serious about climate change? – The Conversation
Now forest to be created in West of England, 20m trees by 2050 – Guardian
EVs (the new PCs) mini-special
The slow but steady advance of driverless vehicles – BBC
BYD says it can charge an electric car in five minutes… – Gizmodo
…which could be EVs’ DeepSeek moment – Axios
China’s EV boom is bad for US tech – Crazy Stupid Tech
Can you fool a self-driving car? [Video] – YouTube
Robot overlord roundup
AI has a search citation problem – Columbia Journalism Review
Majority of AI researchers say scaling is a dead end – Futurism
Dating apps are all-in on AI, whether users want it or not – Sherwood
Why AIs still struggle to extract data from PDFs – Ars Technica
30 ways to use AI to make life better and easier – Art of Manliness
Not at the dinner table
Whitewashing American history – Can We Still Govern
Doubt – The Edgy Optimist
The architect of Project 2025 is ready for his victory lap – Politico
Trump halted Agent Orange cleanup in Vietnam – ProPublica
Dollar devaluation and the anti-system youth – Kyla’s Newsletter
Destroying America’s brand – Paul Krugman
Off our beat
The prehistoric psychopath – Works in Progress
Six secrets to a long awesome life – Barking Up The Wrong Tree
William Bernstein: Oracle of the Apocalypse – Advisor Perspectives
19.2 minutes – We’re Gonna Get Those Bastards
The last decision by the world’s leading thinker on decisions – WSJ [h/t Abnormal Returns]
How the Irish pub became one of Ireland’s greatest exports – The Smithsonian
Labour’s plans to get Britain building again might just work – The Conversation
The blonde advantage: fair hair completely changed my life – Guardian
British Rail wasn’t all bad – The Conversation
R.I.P. quant-father Barr Rosenberg – FT Alphaville
And finally…
“We need to distinguish what is actually dangerous from what sounds frightening.”
– David Spiegelhater, The Art of Statistics
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It’s been quite interesting for me this market dip since mid-Feb.
My bucket of ~ 10-15% allocation to small/micro/nano caps have actually gone up overall. Been a good diversifier.
To paraphrase Alan Jacobs, writing about “the seductions of prediction,” and using William Goldman’s famous lines as an ending:
“…the single most important fact..of the entire [investment] industry.. “Nobody knows anything..”
“If there is a Roman numeral I to this.., that’s it….”
“Not one person in the entire [investment] field knows for a certainty what’s going to work.”
“Every time out it’s a guess—and, if you’re lucky, an educated one.”
Is right now, here in late March 2025, a September 1929, a September 1987, a February 2000, an August 2008, a February 2020 or a December 2021 moment?
Are we, as in each of those months, at the precipice of a great and imminent fall?
Don’t know.
Can’t know.
What I do know is that you cannot find your house keys – if you lost them outside at night – if you’re only looking for them by the street light because that’s the only place that you can see clearly in the dark.
Everyone knows Trump’s into tariffs.
Everyone now knows that he’s at least prepared to begin implementing some of them.
That’s in the market price.
There’s no new nor any widely unappreciated or misunderstood information there.
So doing anything portfolio wise based upon it (tariff panic) and it alone makes no logical sense – even if action now (whether sell or buy) does, retrospectively, actually turn out to be the ‘right’ choice.
In early Feb 2020 the little appreciated info was that Covid was not going to be contained like China, S. Korea and Vietnam were (initially) managing to do with it at that point in time.
Then, later in the month, the info came in about uncontrolled spread in Spain and Italy. The market reacted with lighting speed to price that in.
To now read the tariff situation (and to assess its future impact on asset returns) right you have first to understand fully what’s really going on in Trump’s head – and no-one does; not Steve Miller, not Steve Bannon, nor Elon Musk; and probably not even ‘the Donald’ himself.
@DH. I disagree. “the Donald” does know what he’s doing. Yes, Trump is a failed businessman, and he’s an abysmal statesman. But he’s a very successful reality TV star and he’s leveraged that skill to become a phenomenal political operative in a world where social media is dominant. And as every media star knows, it’s all about ratings and followers. He hasn’t got a political base. He’s got a fanbase.
To keep those fans tuning in requires constant conflict and chaos. There is no need for a political ideology or economic plans. There is just a need to, every day, dominate the headlines by flooding the zone. This keeps people glued to their screens, awaiting the next tweet, next conflict, disaster etc. It all makes total sense if you look at him as a reality TV star. It’s brilliant.
The absence of ideology makes any predictions about this President even more precarious and useless than normal.
British historian Dominic Sandbrook and Anthony ‘the Mooch’ Scaramucci had an interesting exchange of views on election night about whether Trump is a fascist.
Both were right in different ways.
Sandbrook to say that there was only one fascism and it was unique to one place and time – Italy 1922-43.
The Mooch to say that this was irrelevant because Trump does obviously fascist things even if they’re devoid of the pseudo-scaffolding of fascism (the ideology of the Corporatist State, the explicit invocation of Imperial Rome, elements of Italian futurism etc).
But having no vaguely coherent belief system (however abhorrent) makes second guessing which way Trump 2.0 is going to veer next an exercise in futility, and one which probably has negative NPV given the likelihood of getting it wrong.
Then again, the Guardian today thinks he does have an ideology, sort of:
https://www.theguardian.com/commentisfree/2025/mar/22/donald-trump-peace-imperialism-ukraine-gaza
As a Canadian, I pretty much divested of most of my US stocks for EAFE index funds in January. I am a bit worried about the uncertainty of the markets in the current political climate, for sure, but also it just doesn’t feel *great* to invest in the US right now. I know that we should not blahblah make emotional blahblah investing decisions but I am happy with my mix of CDN/EAFE/sml usa portfolio for now.
@ZXSpectrum48k – Guessing you watched the recent Wolff interview? Certainly an interesting view.
I don’t think Trump has any hard ideology, except to be the centre of attention. The ultimate narcissist. Trump is, however, a cipher for various competing ideological interests.
Project2025 delivered page by page. Christian nationalists who want to make the Taliban look progressive. White supremacists, misogynists. Bannon’s acolytes flooding the zone with shit. The South Africa tech and crypto bros destroying regulation to gain ‘liberty’ (for themselves, not the rest of us). They say the upcoming AI war with an authoritarian China cannot be won if we have with one hand tied behind our back by feeble democracy. An authoritarian system is required. Not fascism, but an illiberal democracy, an oligarchy, even a monarchy. So, with all these competing interests, all lobbying him, yes, it’s a many-body problem with no way to predict the outcome.
Nonetheless, saying all the above, I see one constant. Grift and corruption that are off the scale. Trump launching a meme coin the day before inauguration so that, say Putin, can pay him billions with no one any the wiser. The Trump family co-investing with the CEO of Binance. Who cares if he facilitated payments to Al Qaeda, ISIS and Hamas. Musk getting access, through DOGE, to competitors and individual citizen data. The IRS having cybercrime and fraud divisions gutted. The DoJ told to deemphasize white collar crime. This is total state capture.
State capture is an interesting investment case. I’ve seen it many times in EM. The US now fits the model. Do you exit and run for the door because it’s corrupt? Insider trading will be the least of your problems. Or do you double down because if a few oligarchs have just captured the largest economy is the world, their ability to make trillions is nailed on. Can you afford not get a slice of that?
Agreed, multiple things can be true about the Donald. He’s exceptional at what he does which is disruption and capturing attention to execute someones’ agenda, and still seemingly an appalling individual (seemingly because I don’t know how much of this is an act, negotiation gambits, being a mouth piece for various interests as most figure heads are). Things are certainly shifting, and seemingly wrong wards, on the global stage and in the US in a way they haven’t for decades. Again seemingly, because who knows what the 3rd, 4th etc order consequences will be or how much of the plan will get enacted.
I don’t see the need to pay any more attention to the orange cheeto than absolutely necessary. This served me well during his first term and meant I stayed the course (VT and chill), even through his 2018 trade war with China. Not sure why this time is so different?
From a personal standpoint, I’ve divested from most US work and travel at the end of last year and the mental/emotional dividends have been amazing.
>Or do you double down because if a few oligarchs have just captured the largest economy is the world, their ability to make trillions is nailed on. Can you afford not get a slice of that?
Is it going to be reflected in equity valuations though?
I can’t see how that “buy, borrow, die” strategy could be used by “normal” people wanting to better their lot? Any thoughts please?
Most uk mortgage companies for example set an age limit on lending term and loan is assessed by income. The lending criteria for the majority of loans available to mere mortals is income tested and driven by earnings. No income, no loan.
Is it only applicable for billionaires living in America? Would love to know whether anything practical that could be done in UK to apply a similar strategy.
“Or do you double down because if a few oligarchs have just captured the largest economy is the world, their ability to make trillions is nailed on. Can you afford not get a slice of that?”
This is a very interesting point – if you believe that the oligarchs and billionaires are somewhat in charge, surely they are going to have a very strong interest in keeping the stock market going up – as well as other risk assets of course – real estate etc?
In theory, you could have a massive boom in risk assets over the next few years.
As investors (this an investment blog?) we must constantly remind ourselves the secret of successful investing is based on a few unalterable principles
We must combat our urge to tinker with and trade constantly based on our human make up ie acting on impulse ,emotions etc-staying the course is a winning investment strategy
Making investment decisions in reaction to political events invariably gives disappointing results-politicians come and go and do not have complete control over over world events
Know stockmarket market history and its normal many periods of volatility -making constant investment reactions based on current events is not a successful investment policy
Possibly keeping our investing and our human nature separate is impossible but those that can get nearest to that difficult to achieve state of separation will be the investment winners
xxd09
@xxd09 – there are some good looking ‘Trump trades’ out there. I think that having a portion of one’s portfolio based on Geo-political narrative is not an invalid strategy (I understand not your cup of tea obviously).
@xeny #10, @ZX #7: “trillions nailed on”: investing is meant to be apolitical but, knowing what happened next, who could have invested in IG Farben or VW in the 1930s based on only purely commercial analysis?
Then again, it was virtual active investing orthodoxy until the mid-2010s to buy UK dividend income funds choc full of tobacco stocks, whose highly addictive products have caused tens to hundreds of millions of painful deaths/ foreshortened lives.
At least EBVs unambiguously help reduce carbon footprints and nothing TSLA do is inherently evil.
Having said that, it’s not clear to me that Trump is actually a net advantage to TSLA or, say, PLTR (for the Thiel to JD Vance link).
The MAGA nativist grass roots seems disconnected from the ‘dark MAGA’ tech oligarchy. I don’t see all those red hats in fly by country making up for lost sales in California or Germany. The plunge in global Tesla deliveries from ~1.8 mn to ~1.6 mn supports this. Is it only temporary or a trend though? Who knows?
And, as for PLTR, Hegseth is looking to cut the DoD budget and Trump, the deal man, hardly looks like standing up militarily to Xi or Putin.
So it doesn’t obviously look stimulative for the Total Addressable Market in Alex Karp’s core sales area.
And layer on tariff chaos and Chinese manufacturing prowess (BYD) and it also doesn’t seem obvious to me that Trump is some sort of ‘funding secured’ moment politically and economically for Musk either.
As Tucker Carlson (whose internal emails and texts at Fox were disclosed in 2023 in the Dominion Voting Systems lawsuit against Murdoch group) put it; Trump is good only at “destroying things,” and “He’s the undisputed world champion of that”.
Those businesses drawn closest to the Donald may find they’re not exempt from that destruction.
With all the noise I did briefly consider swapping my yearly 20k passive isa funding to gold instead. But then that’s exactly what I shouldn’t be doing if history repeats. Gold going up, stocks going down. I want to buy when things are cheaper. Got a long way to go on my timeline so as long as it’s not an end of the roman empire moment should be ok. I do get a bit worried holding cash though it just seems all currencies in history have been printed into worthlessness.
I don’t understand all the trump hate. He’s unapologetically patriotic and America first. He’s doing what he said he would do. If he was elected on these promises then surely you have to respect the Americans choice of priorities.
On a sneaky end note, I have seen the local authority taxi bills being picked up by bigger media now Reeves has to tighten the belt again. Also the pip motability car scam had a good double page spread in Sunday paper the outher week. Best bit is that councils are not even allowed to ask if claimants already have a motability car when assessing the need for school taxis!
@Jim
You don’t understand the Trump hate? There’s nothing to respect about what the US administration are currently doing. In similar vein, so we should just respect Russia’s priorities while they casually commit murder and atrocities across the continent? How about Godwin, should people have just respected the German peoples priorities in the 1930’s and 40’s?
What a tone deaf comment.
@Cantseethewooforthetrees #11: looks like for US ‘billionaire class’ only.
With their “dynastic trusts” they can make it work.
For the rest of us there’s just tax relief on SIPPs, VCTs, EIS and SEIS.
@interesting point #12: “if you believe that the oligarchs and billionaires are somewhat in charge”:
I’m not sure they are really.
As @ZX #7 (2nd para) alludes to, there’s a confusing miasma of different groups orbiting around Trump, some with overlapping agendas, and some not.
It’s a bit of time machine.
The evangelicals and Christian nationalists want to take America back to the seventeenth century. Trump is their King David.
The American nativists – which I suspect best represents Trump’s own ‘thinking’ (if you can call it that) want to go back to the end of the nineteenth century, when McKinley (1897-1901) leaned into tariffs and (like Trump with Panama) sought (after the Spanish- American war of 1898) to acquire strategic colonies both in the Americas (Puerto Rico and Cuba) and (like Trump with Greenland and Gaza) further afield (Philippines and Guam).
Then there’s Project 2025, which seems basically an admixture of 1950-54 era McCarthyism / John Birch society with 1980s Reaganite neo-liberalism on steroids.
Finally, you have the South African tech and VC billionaire bros: Thiel, Musk and Sacks (see FT last year on this last group):
https://www.ft.com/content/cfbfa1e8-d8f8-42b9-b74c-dae6cc6185a0
I don’t know what century they want to take America to (twenty third??)
But, unlike the other factions (although they do overlap with the agenda of the ultra Reaganites in Project 2025), the techno accelerationist / technogarchy wing of Trump’s entourage looks to the future, and not an imagined past, where America *was* ‘great’ and can (somehow) be made such again.
With the likes of Marc Andreessen, they’re into all sorts of arguably ‘weird’ stuff: transhumanism / life extension, post humanism, techo singularitarianism, effective accelerationism.
It’s Ayn Rand meets the Cybermen territory.
They remind me of the Bene Gesserit line “our plans are measured in centuries”.
All potentially rather chilling and, in the longest term, more impactful, I suspect, than the (part-aligning, part-conflicting) agendas of the various other factions around Trump and, indeed, whatever passes for Trump’s own agenda here, if he even has one.
But the techo wing nuts are not DJT.
He is sui generis.
The Great Performer. Politics as theater. Mussolini for the middle aged. But with more than a hint in there of a hybrid world view from America in the 1890s and 1950s.
The tech bros don’t want tariffs, but that’s what McKinley did and so the Donald emulates him, notwithstanding that the third decade of the twenty first century is a very different place to the last decade of the nineteenth.
And, unfortunately, because DJT is an American nativist, and not in with the tech bros agenda (really); that’s why the US allocation side of my portfolio is looking like an open wound compared to the heady days of the Feb ATHs. Perhaps I can send the Donald the bill. It’s the least he could do.
@Jim – Guess this is why a suitable allocation strategy is important. My wake up call to re-asses the stock/bond/cash portfolio was due to what happened from March/E 2020 onwards. I’d gone to 15% precious (mostly Gold with a bit of Silver) from mid-2020 onwards for the reasons you cite about cash – has turned out OK (I admit I probably made the call from the left had side of the normal distribution IQ meme).
Now I feel comfortable re-balancing at times like this, rather than changing my allocation strategy.
@Jim – in addition… just want to give you a little support with regards to your comment about Trump.
I’m far from a Trump fanboy (he ultimately answers to the same lobby as previous US admins), but all the atrocious things that have happened under various US administrations for the last few decades around the globe seem to pale into insignificance compared to what Trump is doing – I find this difficult to understand. I mean, why do people get more upset about uncouth hurty words than, for example, going into Iraq / Afghanistan under false pretenses, completely destabilising Libya & Syria ..etc..etc.. ?
@all — I appreciate politics is a factor in this discussion — and I cited my views in the article — but I don’t think we’re going to get very far on Monevator resolving a debate as to the merits of President Trump, and I say that as someone who finds that statement oxymoronic.
I’d suggest where possible we state our views on Trump as required but then try to focus on the perceived impact of that view on markets, investors, and companies?
I doubt we’re going to change each other’s minds on an investing blog about the most divisive US President for many many generations.
Of course, one’s view of a President – whether this one or any other – informs / clouds one’s view of the consequences of that person’s policies.
And this includes what effect they might have on markets; and also about what, if anything, you could or should do about those consequences.
You just can’t get away from the tyranny of opinions, including one’s own.
For example, if you think that Trump is/was a KGB/FSB asset, as this investigation concludes:
https://open.substack.com/pub/michaeldsellers/p/trump-and-kgb-part-3-if-we-follow
then that’s inevitably going to colour somewhat what you think his motivations might be, and therefore what he might do next.
And what you think he might do next will then be influenced by what you think (i.e. good, bad or indifferent) about those possibilities.
And, in turn that’s going to affect what you think you should (or shouldn’t) do in light of those outcomes, including in terms of your actions in relation to your investments.
But none of this is actually helpful as a framework for thinking in a complex, probabilistic and dynamically linked world, such as we all live in and share.
We can’t all be a George Soros, trying to navigate, via reflexivity theory, towards 30% annual returns for decades on end.
If I could do that then I’d be managing OPM for a hedge fund from the Maldives, rather than counting down the days to when I can retire and cease my meagre wage slavery on this rainswept Isle.
The world does not proceed in a linear fashion.
If Trump is the MAGA Messiah, then it does not mean that ‘number go up’ on the markets.
And just because Elon does DOGE, does not mean that TSLA is going to be a 10X for 2028.
Equally, if Trump is America’s nemesis, then that (by itself) does not necessarily mean that global risk asset markets are heading for the toilet, and/or that TSLA is for the bankruptcy courts.
Narratives, including political ones, do not normally drive prices, but rather (usually) the opposite.
We can say that the US market probably looks at least a bit stretched (maybe very stretched) valuation-wise, and that surely this makes it somewhat more vulnerable to a fall (all else being equal), regardless of what the causes might be if one should happen to it.
Trump adds another vector of policy uncertainty/volatility.
This is *usually* not a positive for markets, but it all depends on what he now actually does. And we just don’t know.
And whilst we’re fixated on Trump whose to say that, if he is actually a risk factor, that there’s not far bigger risks lurking?
Covid came out of the blue. A true exogenous shock. Markets would have taken a swoon five years ago regardless of whether it was Hillary Clinton or Donald Trump as President #45.
Likewise, what happens if Leopold Aschenbrenner is proved right, and ‘full on’ AGI arrives by 2028/29/30?
Or the opposite, and AGI never arrives?
Will any of these scenarios prove to be a bigger mover of markets than anything Trump does, or doesn’t do, in the next few years?
Who knows?
And if AGI were to arrive soon, then what effect would it have on markets if China got there first?
Who knows?
And how much of this is priced in, or not priced in, already?
Again, who knows?
Nobody knows nothin’
@TI Somewhat surprised that no one has pointed it out yet (I guess DJT has this distracting effect on people) but the Barr Rosenberg link is pointing to the wrong place.
@Jiffy — Thank you, annoyed at myself, particularly as FT Alphaville made the nice gesture of this obituary being a free to view article.
I’ve corrected it now, FWIW.