Time to run?

The MAGA fanboys and Trumpers below decks chaffed and squawked yesterday when this blog said a sex offender was plucked as head of the US justice system. Matt Gaetz is a pitbull, ready to rip the private bits off all of the president-elect’s many foes, using the power of the state to do so.

He’s alleged to have paid for sex with a 17-year-old, engaged in druggy parties and maybe been involved in child sex trafficking. There’s a report. His colleagues won’t release it. Nobody seems to like him, by the way. The perfect, imperfect Trump soldier.

Well, he’s not a convicted felon (like his boss), but emblematic of what’s now happening in Washington. What a gong show. (The NY Times yesterday published material linking Gaetz to the sex buys.) Trump’s defence pick is a Fox TV host also alleged to have been a sex abuser. A pro-wrestling exec will head education. A TV doctor will run the $1 trillion medicare department. An anti-vaxer will be in charge of public health. That famous puppy-shooting lady will lead the Homeland Security army. And on it goes…

This worries the poop out of Glen.” Honestly, the US looks really ominous right now,” he tells me. “Every day there’s some new numpty being appointed to a serious public position. Dr Oz?!  I want to believe that these people are about to be taken to school by the very civil servants they will be in charge of on the very topics that they know dangerously little about. If you don’t know HOW to run a country, and/or you’re intent on breaking every norm and system in it that has hurt your margin or your feelings in the past, and eliminating any structure for accountability, how CAN you run a country, especially when it’s being deliberately pecked away at by non-friendly states?”

“It seems precarious. So tariffs and decreases in globalization, less efficiency, higher costs, more boondoggles, plus Russia/China, plus increasing climate catastrophes, and more stupid ideas like nuking hurricanes or praying away the next pandemic with apple cider vinegar. I feel like I want to tread cautiously going forward.

“So, for the first time, I’m thinking of selling half of everything, evenly, across the board, and then sitting in a “Wait and See” mode for 6 months. I know, I know: stay invested, there could be big, rare upside days. But things are not looking bright or stable, so why not take some money off the table for a few months and be a bit more conservative during the impending chaos?”

It’s a fair question. An understandable one. Banker buddies tell me they’ve seen a big pop into HISAs and braindead GICs since November 5th. Trump was scary enough with his dark rhetoric and nonstop threats. Now his cabinet appointees confirm that the ravings will actually become actions. Outcomes are unknown. So should you run to cash, like Glen?

No, of course not.

First, stock markets have been on a tear since the election because Trump is seen as an agent of stimulus, economic bravado, serious corporate tax cuts and is guaranteed to be a friend of the same corporate barons that he’s brought into his inner circle. So in the short term, equities will love him, as they adore Nvidia and anything else dripping in profitability. Stay invested. Returns in 2025 could test the 20% mark, some analysts predict.

Second, the president-elect’s America-first, protectionist and stimulative plans have goosed the US dollar, which has been blasting past ours, the peso and the euro. This is likely to continue for most of the next year until investors get fussed over the deficit and debt. If you have maintained that 25% US$-denominated weighting in your portfolio (that we’ve suggested for the last decade), stay the course. No need to trash maple assets.

Third, at some point the Trump glow will turn into the Trump dump. These policies are inflationary and any plans to carry out mass deportations will make things more dire. There’s a new wage-price bomb ready to go off. The Fed will respond by keeping rates stable, then (likely) edging them higher. The combination of increasing consumer prices (due to tariffs), augmented producer costs (as the labour pool shrinks and wages increase) plus rising debt charges (as rates bump) will bring a different world, economists say, in 2026 and beyond. If the midterm elections strip Trump if his control of Congress in that year, much may change.

So, someone with a balanced and global portfolio will be in a better position to ride out volatility in the final Trump years, while having gained from the earlier ones. Stay the course, Glen.

History shows that going to cash for long periods of time never builds wealth. Missing the best days of the market is more injurious than trying to avoid the worst ones. Emotion is not your friend, which is why we in the financial business have none.

The only serious worry is if, ha ha, there were no more elections and Trump told people they wouldn’t need to vote again.

Oh, wait…

About the picture: “Attached is a picture of our beloved dog, Jasper,” writes Matt. “He is a 5 year old German Shepherd cross and the biggest suck you have ever met. He is an absolute trooper with our 4 year old daughter and can usually be found suckered into some dress up game in her room. Otherwise he is my loyal fishing companion on the Bow river. Thank you for your daily free advice and guidance.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2024/11/21/time-to-run/