Blog November 2018
I hope you all had a great summer (I started this in September!)…time goes by so fast and we all get so busy we forget to “smell the roses”. I have been insanely busy this year, but am happy to report that we took some very high quality time off and thoroughly enjoyed it. I hope you did too!
Lets discuss the stock market, starting with some predictions from November 8th, 2016. First the facts: On the day Trump was elected the Dow was at 18,332. This last Friday (August 31st) it closed at 25,964 for a 42% increase (It is currently up 32%). Here are some predictions from the day before and after the election and other interesting quotes (I promise, I am not making these up!):
Opinion: The stock market could crash if Donald Trump is elected president (Simon Johnson):
WASHINGTON, D.C. With the United States’ presidential election on Nov. 8, and a series of elections and other political decisions fast approaching in Europe, now is a good time to ask whether the global economy is in good enough shape to withstand another major negative shock.
The answer, unfortunately, is that growth and employment around the world look fragile. A big adverse surprise — like the election of Donald Trump in the U.S. — would likely cause the stock market to crash and plunge the world into recession. Update: Unemployment is at 50 year lows and GDP growth rate is up over 50% over the prior eight years.
This is what could happen to the stock market if Donald Trump wins (CNBC):
Wall Street’s long-running view that Hillary Clinton would easily become the next president has been replaced by a new fear that Donald Trump could win, and it probably won’t be a pretty picture for stocks if he does. One of the reasons I no longer watch CNBC.
Mark Cuban Predicts a Stock Market Crash if Trump Wins the White House (JN: I cant add anything more!)
This one is priceless (it’s worth the click!): https://medium.com/@Moderate/2016-final-electoral-vote-count-228cc8ec7d3f
Jimmy Carter on Ronald Regan during the 1980 campaign: Carter is all business and believes that Ronald Reagan is not his intellectual equal. He has publicly stated that Reagan is “untruthful and dangerous” and “different than me in almost every basic element of commitment and experience and promise to the American people.”
Paul Krugman: The Economic Fallout (JN: This is my personal favorite)
Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear.
Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never.
Can you believe those headlines? My point in sharing these is you have to be careful in listening to the “experts”. Political bias rarely lends itself to investing results. In this case, if you had followed their advice, you would have lost a lot of potential gains in your investment portfolio.
There is a very interesting new underway…Democratic Socialism. The hallmarks are “free” healthcare, college, and universal basic income (a guaranteed annual income) for everyone. One of the posterchild’s of the movement is Ocasio Cortez Kennedy, a juvenile…oops, I mean a junior candidate for the House of Representatives. She has no knowledge of economics…proven by the frequent use of the word “free” in her speeches. She also has very limited understanding of the world we live in (when asked about the Middle East situation, she wasn’t quite sure where that is!). Before you consider “democratic socialism”, take some time to understand what is happening in Venezuela and Zimbabwe. For example, this from the IMF (International Monetary Fund):
(Reuters) – Venezuela’s inflation rate is likely to top 1,000,000 percent in 2018, an International Monetary Fund official wrote on Monday, putting it on track to become one of the worst hyperinflationary crises in modern history.
People are STARVING. So much so there are no animals left in the streets and the Zoo is starting to empty out too. It’s all a result of printing money endlessly for “free stuff”. As Margaret Thatcher famously said…”Socialism is great until you run out of other people’s money”.
It’s really simple, when the free stuff adds up to more (much more) than the tax revenue coming in, the only way to make it work is to print, print, and print some more. You don’t even have to print it now…it happens with a wave of a digital wand. The reality is the United States is already doing that…can you imagine if democratic socialism creeps into the picture? Postnote: Cortez was elected to the House.
I am going to make a prediction that I have not seen made anywhere else: I think labor unions are going to make a comeback…but it won’t be in the steel factories or the car companies. See this article:
Whole Foods workers aim to unionize after Amazon buyout
Interesting isn’t it? Labor unions had their big rise in the early 1900’s with the rise of car and steel manufacturers. Worker’s pay and work conditions were abysmal…and labor supply was abundant. In the early days, unions actually accomplished some good things. As the century carried on, they became less and less relevant and in some cases actually hurt the workers they were representing. They are far more political and far less worker oriented today.
With automation coming on strong, dominant new tech based companies rising, it would not surprise me to see more union activity. Will it work? Who knows? I think it would just push automation faster and further, just like the $15/hour minimum wage has. Another big factor was the introduction of Obama care which has reduced fulltime work to 30 hours or less. Two or more jobs is now the norm…and benefits are few and far between. It’s really sad, but that is how it works now.
The trade talks have been interesting: As usual, dire predictions have been made about the results of negotiations being conducted around the world. So far, Mexico has a new agreement with the US. I think the EU may actually be headed to ZERO tariffs on several major product categories…think automobiles. The way I see China: You have two equally skilled players at the poker table…one has $500K in chips and the other has $125K. Who would you like to be? I expect the US position will improve after the process is done. The critical issue is the forced disclosure of our intellectual property, to the tune of 500 Billion per year…we create and invent new ideas and concepts and are forced to hand them over to do business in China. Its remarkable BOTH sides of the isle don’t consider this a crises. So far, the impact has hit China far harder than the US based on market performance.
Some quick takes:
- A great quote from Maya: The best kind of friends are the ones you call family
- From Brian Dawkins NFL Hall of Fame speech: My haters became my elevators
- Me on Famous Names orders I see: Free freight at $75…and ordering $55-70. Seriously, I see this weekly! It drives me crazy!
- Wow, DOUBLE Wow: 2 Rare Bottles of Macallan Just Sold For Over $1 Million Each https://www.mensjournal.com/food-drink/bonhams-hong-kong-macallan-auction/
- Quote from Rob Roy. Founder of Switch: On the R&D side, you need to do something wrong 30 times before you get it right,” Roy told the Review Journal.
- Terrific Quote from Robert Kraft (Owner Patriots): Jealousy & Envy are incurable diseases. The more successful a business or team is, stronger personalities are attracted and this leads to more tension. But it is a natural part of success.
- This is a good one: Twenty years ago 95% of all photo’s taken were of other people or places. Today, well over half (75%) of all photos are of ourselves.
- EXACTLY: A bureaucrat is a member of a bureaucracy and can compose the administration of any organization of any size, although the term usually connotes someone within an institution of government. Some usages restrict the term so that it only embraces lower-ranked staff members in an agency, excluding higher-ranked managers, or so that it only signifies officials who perform certain functions, such as those who work “desk jobs” (the French word for “desk” being bureau, though bureau can also be translated as “office”).
It’s time for me to send…Linda and I have been to six countries in the last two months, so I am going to start my next issue with a review of our observations. I hope you and yours had a enjoyable Thanksgiving!
Until next time…