Commentary….

This is our Market / Investment commentary page.  We post our views and investment outlook here, as well as answer questions.

—–07/30/2018 —-

Trade war?  What should investors do…

President Trump, whether you like him or not, definitely does not do politics as usual.  One look at his twitter feed (@realDonaldTrump) will tell you that much.  Unlike other presidents, Trump really does send tweets on a frequent basis as a form of communication.  But making investment decisions based upon his tweets is not an investment strategy.

It seems many of Trumps moves are a form of his negotiating tactics.  The question is will the other side of the table realize that is what this is… this is not the normal political way of doing things.  And, when you think about it, the US has not done well playing trade rules the political way.  Just one look at our trade deficit will tell the tale.

And that is where things become a bit perverse; our overall trade deficit is a concern, but we have trade a surplus with some countries and deficits with others.  That is normal… just think about your purchasing habits… you ‘sell’ your labor to your employer, giving you a ‘trade’ surplus with them.  You buy food at the grocery store, but do not sell too them (unless you are a farmer), hence you would have a huge trade deficit with them.  This becomes a negotiating minefield on the national level.  That brings us back to Trump….  He does need to do some dealing with countries on line item things; and general dealings with countries that sell a large amount to the US (China).

As investors, it is important to note that history shows over most time frames you are more likely to be wrong if you are overly cautious then if you are overly optimistic.  The S&P 500 has given positive returns 2.3 times more often than negative returns over 6 month periods and almost 6 times more often when looking at 5 year periods.  Staying invested is, therefore, the better choice.  But, stay invested accordingly to the current situation.  That means lower risk investments; less aggressive growth and more value investments, a little more weight to US investments vs foreign.  And most importantly, stay invested for the long term horizion.  We may have to put blinders on for the next few quarters until the trade skirmishes get settled and pray that they remain skirmishes and not become outright wars..

 

 

 

—–9/02/2016—-

SIMO – Silicon Motion Technology ADR was removed from our BuyList today. It has performed well and was up over 300% from its purchase price in 2013 (58% per year return). This investment was a selection from a proprietary ‘fallen angel’ screen that produces 2-3 out sized returns for every 5 potential investments that pass the screen.

 

—–8/2016—–

Click here for an Economic review / political implications paper.

 

—- 2015 —-
The big news recently is that oil prices have continued to fall! Great! But, why? Oil, if you believe the press and all the alarmists, is running out! It is scarce! Apparently not so much.

When the US started getting more oil and gas production (Marcella Shell among other initiatives) people seemed to breathe a sigh of relief. Unless of course, by people, you mean the Saudi and other OPEC producing countries. If oil was as scarce in their wells as we are led to believe (the reason they were charging so much for it), then why all of a sudden is Saudi Arabia opening the flood gates…. Is it because they love the US and want us to enjoy low gas prices? Maybe they want to sell more since the price is down?

No, I don’t think so. As in most monopoly and oligopoly situations they are trying to hold on to their power. They are using their established wells, pipelines and marketing infrastructure to drive the price of oil down to damage or severely limit the US drilling initiative and its new technologies ability to expand or stay in the marketplace. I am sure after this new competition is gone or handicapped we will see oil again well over $100 a barrel.

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