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Positioning under current climate

edited February 17 in Fund Discussions
I agree with @msf (different thread) that ”Many people find government pronouncements and actions relevant to investing.”

- There’s a thread along that line offered up by @Soupkitchen January 28 in the OT section - mostly buried now by the avalanche of anti-Trump posts & comments. Worth a second look. Where America is Heading and your Investments.

Like everyone else I’m looking for clues. From the two financial blogs / newsletters I subscribe to, here’s what I’ve gleaned …

- On February 3 Bill Fleckenstein wrote: ”Lastly, on the subject of Trump tape bombs, while we should expect them to be a feature of his term, they may become less frequent, and we may get a better handle on what they individually mean. Even so, I think they mandate carrying a little bit more cash or being slightly less aggressive than one might ordinarily be because they can literally come out of nowhere and gaming whether Trump is serious or not will be hard to do in real time.” https://www.fleckensteincapital.com/dailyrap.aspx?rapdate=02-03-2025

- James Stack (InvestTech) actually raised his recommended “Net-Long” market exposure a few percentage points from around 55% to 58% about the time Trump took office (but didn’t connect the two). Stack has been extremely cautious for a couple years. The remainder, he advises, should be in T-Bills or money market funds. https://www.investech.com/

- And Barron’s this week features several Trump related articles - not all complementary. One, titled ”11 Tariff-Proof Dividend Stocks”, mentions consumer staples, financials and energy as among the better plays on that theme. Another article, ”The Markets Trust Trump. How to Trade It”, focuses on options plays. A third article notes that there has been a sharp uptick in very wealthy investors moving wealth abroad, some out of fear of a weaker dollar, but in some cases from fear of retribution by the party they opposed.

It should go without saying that other investment ideas / suggestions are appreciated. Nobody really knows at this point. But risk is inherent in most investing. If it were safe or easy the rewards would be small.

Comments

  • edited February 17
    We've heard over and over, do not let the political environment sway your investing decisions. I'd say that used to be good advice. But we are a long way from a normal situation, in which Dems and Reps disagreed about policy. The rift started at least as far back as Reagan and Gingrich the Newt. The crack has become a gulf. And the two Parties don't even agree on bedrock starting points anymore.

    The current President represents a dangerous sea change. Alliances and foes alike are getting mixed and matched. And domestically, it's a coup going on before our very eyes. The rule of Law is dead right now.

    Where to invest? We have 10 gazillion possible choices in the Market. I'm not chasing anything new. I have a couple of equity holdings which offer hefty dividends. My junk bonds continue to be steady, if not growing much. (Over 7%/month with those puppies.) Money Markets were mentioned above. I'm growing ours at a snail's pace, still rather pleased with the very safe 4.18% offered.

    When the spam hits the fan, I'm already a bit heavier in bonds than in stocks. Hopefully, that will provide some insulation from the conflagration. The Crisis of 2008-09 was dreadful, but for other reasons, excessive de-regulation, mostly. It's happening again, too--- an avalanche of de-regulation. Regulations will never be perfect, because the bad guys will always find a way around them. (Oliver North, yes???) And after the '09 Crisis, CLOs were simply renamed, to avoid regulatory scrutiny. (See the ending of "The Big Short.")
  • edited February 17
    ”We've heard over and over, do not let the political environment sway your investing decisions.”

    @Crash - That’s probably great advice for 80-90% of investors - mostly younger and employed - who research shows are usually better off letting it ride. I’d still give that advice to a 25 year old just starting out with maybe 40 years to retirement.

    But take a look at the “Buy Sell” thread. ”Set-it- and-forget-it” ? Huh? Not to pick on the thread … but ISTM most who frequent financial forums like this one do alter their investments quite a bit year-to-year. So, of course, political climate affects their decision making along with a myriad of other considerations / assessments and may be worth discussion.
  • hank said:

    ”We've heard over and over, do not let the political environment sway your investing decisions.”

    @Crash - That’s probably great advice for 80-90% of investors - mostly younger and employed - who research shows are usually better off letting it ride. I’d still give that advice to a 25 year old just starting out with maybe 40 years to retirement.

    But take a look at the “Buy Sell” thread. ”Set-it- and-forget-it” ? Huh? ISTM most who frequent financial forums like this one do alter their investments quite a bit year-to-year. So, of course, political climate affects their decision making and is worth discussing.

    Right. Dare I assert that most of us here are NOT spring chickens anymore? I'm having repeat surgery coming up in March.... As Leonard Cohen said: "I ache in the places where I used to play." (Tower Of Song.)
    **********
    Skip right to 0:20. (LOUD start!)
    Crescent Street mural, Montreal:



  • I would think the massive government layoffs has to eventuality have an adverse impact on stocks and a positive impact on higher rated bonds. The past month higher rated bonds have seen above average returns and maybe in anticipation of the February employment report on March 7. Much like the action that occurred following the surprisingly weak July employment report on August 2 that carried over the next trading day on August 5. While that response was short lived not sure if it will be so short lived next time around, Regardless I think the tell, be it good or bad, will be that March 7 report. In my neck of the woods which is about as red as it comes politically, the grumbling has already started. That’s because there are worries that the cutbacks to an already understaffed and underfunded National Park is going to impact the local economy. Shrinking an over bloated government sounds like a great ideal until your family falls victim to such shrinkage.

  • @Junkster - would you be concerned that this regime or Congressional dysfunction makes the US default on its debt? If so, wouldn't that pretty much crash Treasuries and make folks reconsider them as a 'safe haven' for the forseeable future?

    That would be a big concern for me. Unlike prior manufactured debt ceiling 'crises' this one really has me concerned....
  • edited February 17
    rforno said:


    @Junkster - would you be concerned that this regime or Congressional dysfunction makes the US default on its debt? If so, wouldn't that pretty much crash Treasuries and make folks reconsider them as a 'safe haven' for the forseeable future?

    That would be a big concern for me. Unlike prior manufactured debt ceiling 'crises' this one really has me concerned....

    @rforno. I honestly haven’t given much thought to the upcoming debt talks and its possible lack of resolution. Perhaps I should add that to my list of worries. My worry is recession if these massive layoffs all come to fruition. And It won’t just be the DC area that is impacted either. National Park employees, and not just my local one, have already received termination notices.
    I think many are underestimating the economic impacts of this shrinkage among all areas of the government. At least for now all is well. Stocks hanging in there in spite of some under the surface cracks and bonds of all stripes and colors doing well YTD.

    At this point in my life and getting up there in age, I am more concerned with how heavy the backcountry waterfalls are flowing for photographic purposes than my portfolio value.
  • @Junkster,

    Appreciate you visiting and posting in this forum.

    @rforno,

    I have given much thought to your question. US default (even a tactical default) does not rank in the top 10 problems that would precede why our investments (other than US treasuries) might take a hit. I think Junkster gave a good lead. He always does.



  • BaluBalu said:

    @Junkster,

    Appreciate you visiting and posting in this forum.

    @rforno,

    I have given much thought to your question. US default (even a tactical default) does not rank in the top 10 problems that would precede why our investments (other than US treasuries) might take a hit. I think Junkster gave a good lead. He always does.

    Oh I would not be selling stocks in such a scenario -- if they swoon in sympathy, I would be buying.
  • edited February 17
    rforno said:

    BaluBalu said:

    @Junkster,

    Appreciate you visiting and posting in this forum.

    @rforno,

    I have given much thought to your question. US default (even a tactical default) does not rank in the top 10 problems that would precede why our investments (other than US treasuries) might take a hit. I think Junkster gave a good lead. He always does.

    Oh I would not be selling stocks in such a scenario -- if they swoon in sympathy, I would be buying.
    I can accept buying as an idea but would keep somewhat tight stops so one does not get called on their bluff or bluff on bluffs. Part of my friction is that I can wager on risks but I can not wager on uncertainties. We are in a perfect environment for nimble traders, which is a very small percentage of market place participants.

    (As to timing sales, that is a difficult art even for the pros like Stan Druckenmiller. Over the years, I have sought and not received good sell strategies. There was an academic paper on this and it concluded that monkeys fared better than professional investors in timing when to sell. (This is not an issue for nimble traders.))
  • BaluBalu said:



    I can accept buying as an idea but would keep somewhat tight stops so one does not get called on their bluff or bluff on bluffs. Part of my friction is that I can wager on risks but I can not wager on uncertainties. We are in a perfect environment for nimble traders, which is a very small percentage of market place participants.

    (As to timing sales, that is a difficult art even for the pros like Stan Druckenmiller. Over the years, I have sought and not received good sell strategies. There was an academic paper on this and it concluded that monkeys fared better than professional investors in timing when to sell. (This is not an issue for nimble traders.))

    Each to their own, of course .... as for me, I don't do stops unless it's for a specific situation/concern. Too easy to get whipsawed out of positions due to volatility in today's 'modern' markets ... I learned that a long time ago when actively trading futures.

  • edited February 17
    rforno said:

    BaluBalu said:



    I can accept buying as an idea but would keep somewhat tight stops so one does not get called on their bluff or bluff on bluffs. Part of my friction is that I can wager on risks but I can not wager on uncertainties. We are in a perfect environment for nimble traders, which is a very small percentage of market place participants.

    (As to timing sales, that is a difficult art even for the pros like Stan Druckenmiller. Over the years, I have sought and not received good sell strategies. There was an academic paper on this and it concluded that monkeys fared better than professional investors in timing when to sell. (This is not an issue for nimble traders.))

    Each to their own, of course .... as for me, I don't do stops unless it's for a specific situation/concern. Too easy to get whipsawed out of positions due to volatility in today's 'modern' markets ... I learned that a long time ago when actively trading futures.

    I too no longer do resting stops. I totally agree about whipsaws from stops. Too many times it just felt like someone had access to my stop limit information and grabbed my resting stop order. But I have mental stops and do not let my greed and fear override it and I exit whenever I see the price is below my mental stop. Obviously, when I am adding to my long term holdings, stops or violating stops is not a big concern.
  • BaluBalu said:



    I too no longer do resting stops. I totally agree about whipsaws from stops. Too many times it just felt like someone had access to my stop limit information and grabbed my resting stop order. But I have mental stops and do not let my greed and fear override it and I exit whenever I see the price is below my mental stop. Obviously, when I am adding to my long term holdings, stops or violating stops is not a big concern.

    Same. I'll use either a 'mental' stop or an alert to tell me that 'something' dramatic has happened that I should look into a bit more clearly -- either on the downside or the upside.
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