Navigating the Storm

One day the markets are tanking in ways we haven’t seen in decades.  The next, they’re soaring.  What gives?

The only real answer to this unanswerable question is that the investment markets are speaking directly to the President.  They wanted him to abandon the tariffs.  They approved of the temporary lifting of the most onerous tariffs on everybody but China.  Then they were telling the President that they didn’t like the tariffs on the delicate chips and computer assembly sector of the Chinese economy.  They applauded then those were lifted.  Down, up, down, up.

There is real danger in markets like these—for investors and also for manufacturers who are trying to figure out the best way to navigate the uncertainty.  Investors who respond to the latest market move are almost inevitably going to be hurt by the next one—which is an exaggerated version of the advice we always hear: to stock to your long-term plan and not allow emotions to override the plan.  Winston Churchill once remarked that democracy is the worst form of government… except for all the other ones.  Long-term investing is the worst way to navigate the markets…  except for all the other ones.

But… are the tariffs going to boost the economy eventually?  Oddly enough, the same bromide applies to economic policy: you pick a plan and stick to it.  Manufacturers are reporting that all the uncertainty has frozen them in place, not knowing what their products will cost overseas to foreign buyers, not knowing what their internal costs will be (and, therefore, prices will be) if/when the tariffs are assessed.  

And so the conversation between the markets and the White House continues, with no clear end in sight.  It’s an increasingly heated discussion that most of us should steer clear of.

Source: 

• ‍https://www.yahoo.com/news/trump-claims-wants-boost-american-145627859.html

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