THE ART OF WAITING FOR THE DEAL
Hello and welcome back to the latest edition of the No Straight Lines Investments blog, I am thankful for your time and attention.
I have spent close to 30 years investing and analyzing the market, and last week is on par with experiences during COVID, the GFC, the tech bubble, the Russian ruble crisis and more.
Each of these market environments had their differences of course.
As many a market commentator have highlighted, the challenge in analyzing the current market is that a tweet can completely change the narrative.
Case in point: on Wednesday, GS Jan Hatzius raised his odds of a recession to 65%, only to reverse course < 2 hours later when President Trump announced the 90-day pause on reciprocal tariffs OTHER than with China.
No secret that my favourite economist is Mr. Hatzius, so if he is forced to change course abruptly, how difficult is it for the rest of us??
I have maintained the view that President Trump is negotiating for the best deal possible for the U.S., whether I agree with the tactics is not the point.
If you buy into that view, it is fair to conclude that last week represented the peak of tariff uncertainty.
This is by no means the all clear (as I have said many times, there is no such thing in investing, and it is never obvious until AFTER the fact).
However
It gives credence to the strategy of waiting for the deal. As I type this, President Trump has declared computers, smartphones, semi’s as exempt from China tariffs….err, sort of.
Chart from Bespoke Investments
If you are nimble enough to trade around the volatility, there are more $$ to be made, but as you can see from this great chart from Bespoke Investments, simply staying invested is the best strategy.
And as I alluded to last week, the BEST market days tend to happen around the worst market days…..
For this week I will again share graphs and charts that I found helpful to help me navigate the tumult. Whilst fundamentals ultimately drive stocks, right now it remains all about forward progress on tariffs.
Marko Papic of BCA did a fantastic slide outlining the 7 Steps President Trump has used/will use to negotiate:
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If this is it, thanks for reading and best of luck with your investments this week!
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