Who
doesn’t enjoy a mad swarm of bees–more than a trade war wedgie? Bees obey rules, usually. Besides, it’s hard to navigate with your unders wrapped around your chin. Trade is a fight and all fights are personal. Can anyone else hear that back-up warning beep? Once launched trade wars float forward creating some funky life all their own. Trade wars are also sort of like that guy stitch-fixed together out of spare parts by that famous German doctor. No one knows what’s coming next. They lumber and lurch clumsily crushing anything good and sensible. Soon the goal shifts to stopping the damage.
Thieves piss everyone off, with the exception of those doing the thieving. Some entities refuse anything but a boot in the ass. Ask T. May. Middle school also proved that. Such requests should be solemnly honored. Talk goes only so far. Sometimes only a frown signifies progress. “Forced technology transfer” is not free trade, and “Joint venture partners” who systematically steal are not partners. Meanwhile the WTO has never loved America and looking to them for fairness is as effective as tossing empty pop cans.
This gargantuan pie fight mashes onward, and investors make their way through the mess. Doing so intelligently means sticking to what works. No one knows our collective future. They only pretend to. We alone hold on to our portfolio rudder. Thriving this trade war. Ultimately one truth exits. The decisions are ours.
The
“basics” are the keys that so often slip past our focus. The stock market is complex. The basics make that easier. For example. Strategy. Traders trade while investors invest. That’s basic. Mixing the two creates a complex. How do we intend to thrive this trade war? By sticking with our strategy. We are investors. We will invest.
Sj is busy beginning a new portfolio for a new investor. Sticking with our strategy, we will build an investment portfolio. That’s what we mostly do. Most understand that investing is complex, comprised of two or more parts. Most also see it as complicated, or hard to understand. It is. Continually clarifying your strategy and it’s method reduce confusion, in a confusing market. The fundamentals are where investors begin.
Street
fight confusion is now the norm, and starting point, sometimes daily. This market is a constantly moving target. Clarity is the first step. Consistent execution is the path. The only thing in-between is work. How do we intend to thrive this market? Work, and discipline. The basics of good investing form guide our way. Investors want companies with strong fundamentals. Only they will do well over time and amid chaos. How to thrive means buying and owning only the best.
Thriving this trade war means knowing your strategy and sticking to it. Our strategy is long-term investing. That means buying only the best, at great prices, and holding them through the storm.
Why learn investing? The retail investing business will take your hand, and then insinuate that you can’t do it yourself. They will suggest you not even try. “It’s too hard, and “confusing, dangerous” really. They’ll sell you the packaged product right off the rack, including their indispensable “guidance,” for which you will pay.
Paying is not investing. Nor is uninformed ownership. The retail investing front will treat you like children while smoothly rifling your wallet for big money disguised in fractions of a percent. That’s not investing either. They’ll float comforting simplisms in place of messy realities and assure you all is well. Yet they will never tell you the true cost of not knowing.
Trust is no substitute for knowing. Not knowing is the beginning point of all cost, and most loss.
Expertise is where you find, or build, it. Being paid to give it, or paying others to provide it, do not determine its’ presence. Pay never did determine expertise. Any cognizant investor will tell you that the best expertise for any investor is that which you command yourself. Why? No one cares more about you money than you. The expertise of others is mandatory. Yet what you command creates both your investing trajectory, and safety. Only good direction will lead you toward good help, and results.
Investing during bull markets is much easier. We enjoyed that, but that’s over now. Thriving a trade war environment means upping your game. What you know and continue to learn will carry you through, as long as you keep going.
Nonsensical
disempowering voices don’t help, and exist everywhere. Such are to be dropped as if hot coals. Anything done well requires unfettered growth. That frightens disempowered people. Like investing, life is a one-way trip not to be sidestepped or dissuaded from. Mousy people will never coach you through complexity, or toward the expansive way. We will not find them beside us in the investing fray.
A spirit ignited forms an unquenchable thirst. Passion is life and passion will accept no dissuasion, nor bow to complication, or complexity. They are simply starting points waiting to yield to our burning spirit and agile minds. Any trade war is but a passing complexity on our way to more.
The smartest investors often make the worst TV guests. Why? Because “I don’t know” does not create thrilling television. This Art Cashin. Cashin refuses to pretend, and spends little time on television precisely because he’s willing to say “I don’t know.” His disinterest in bottomless speculation leaves little to discuss. And why talk Art? Because Art will tell you that absolutely no one knows what’s coming next.
-Where We Stand-
Markets are beasts obeying no master. “Who’s your daddy?” Discipline often means doing nothing. Patience is often the hardest part of good discipline. FOMO, or the “fear of missing out,” makes doing nothing almost impossible while watching Beyond Meat(BYND) rocket 600%. Yet buying stocks selling at 100x sales is like owning a flaming roman candle.
The macros are driving this bus–trade war uncertainly, the wide impact of tariffs, a flat yield curve, a dithering neophyte Fed, rate cut confusion, service sector inflation running steady at 2.7%, while goods and commodities prices lean to the deflationary, corporate debt on the high end, and weak credit demand, and a housing market firing on four out of eight cylinders.
Short
covering played the driving role in last week’s market up move. The S&P 500 now sits 2% from all-time highs, yet flat over the past 17 months. That means stocks are expensive, in general. As we’ve stated previously, the defensive stocks such as utilities and consumer staples are too expensive to buy. Meanwhile, the secular growth stocks that are working are now also too extended to enter. Think TWLO, TREX, and AMZN.
Market darlings such as Alphabet, Apple, and FB are now targeted by the joint governmental anti-trust probe officially launched on Monday. Persistent uncertainty continues to create cuts or delays to capital spending. Beyond that, global economic slowing, recession fears here, and tariff pressures, continue to drive downward revisions to earnings estimates. Does it seem likely that all of these are fully priced in? Does it appear any of these drags and disruptions are done? Not likely.
Markets loathe confusion and uncertainty. When markets behave irrationally or unpredictably, increased confusion is the result. When in turn market analysts and pundits speak with a thousand voices additional confusion is the result. Smart, informed, experienced people routinely reach different conclusions. Thus, knowing your way through that morass is mandatory. Now is that time.
-Trade War-
The May 18th edition of The Economist addresses the trade war in a special report. What do they say? America’s got it all wrong. Rather than antagonizing its’ allies, America should enlist them in the wider trade struggle with China. True. The projection of “hard power” in the South China Sea comforts our Asian allies. Yet America should not forget “soft power,” or diplomacy. More specifically, “America and its’ allies have “broad powers to asses who is behind what.”
The paper continues “…the west knows too little about Chinese investors and joint venture partners, and their links to the state.” “Dealing with China also means finding ways to create trust. Actions that America intends as defensive may appear to Chinese eyes as aggression, that is designed to contain it. A stronger defense thus needs an agenda that fosters the habit of working together.”
- Dealing with China is a game of make believe and multiple faces. Often what’s said is not what’s meant. “Saving face” is an example, one that has proved very difficult for Americans to gather or remember. No deal, of any kind, will ever seemingly come without it. A “win-win” scenario is the only solution, even if it’s partially pretend.
The
wider theme of market confusion continues here. That is the point. Navigating our markets means contending with all its’ active ingredients. Investors often flounder when our sources continually speak with divergent voices, or dither in pure unreality and feigned authority. Speaking to the Economist’s point of building trust; how do you “create trust” while working within a system designed to steal? How do you trust companies subject to governmental extinction at whim?
“Knowing” more about “Chinese investors and “joint venture partners” does nothing to halt state-mandated “forced technology transfer.” Organizations that steal are not our “partner.” “Forced technology transfer” is not free trade. It’s Fa King theft deserving of tariff terror. Being forced to determine the “links to the state” isn’t business. It’s espionage. The notion of “creating trust” with a country known for cyber warfare is ludicrous. True trade expertise understands.
Knowing
current circumstances, your strategy, path, and your goal, provide the way to thrive, even a trade war. Such have never been more important. Discipline helps when facing the intrinsic complexity and complications of mad markets and exploding rockets such as Beyond Meat. For us that means strategy–trader or long-term investor. That means as a long-term investor, resisting the spectacular sky rides of the moment. And that’s precisely why we were not aboard when BYND crashed 25% in a single session mere days ago.
Day Jam
Chet Baker; “You’re Driving Me Crazy.”
https://www.youtube.com/watch?v=-3A5PTOd8-0
The Investing Journey
STOCKJAW
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Thanks for Reading.
The ability to find and use photographs to complement a point is awe inspiring. Take the interchange photo. Did you notice the building left standing that the highway was apparently built around? The complexity of the engineering makes using it, a simple and seamless process. Outstanding work. Just keep us informed in your unique manor.
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Hey thanks Fitz. Next we have to talk about Harris Corp., the defense contractor you found. Very nice, in a difficult market. Sj.
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