Message from Jon
Tariffs, Trade Wars, and What Next?
With the recent news that President Trump has elected to tag a 10% tariff on $200B worth of Chinese Goods, China is promising to retaliate.1 This was not un-expected though. The media has been focused on Hurricane Florence as of late, which has given a bit of a reprieve from forcing everyone to react to the news on the tariff discussion.
Our concerns are: foreign investments remain given that the tariff discussion COULD grow into something more before it is solved. As such, we have taken a defensive stance on foreign risk exposure and especially emerging markets for the time being. We are expecting this discussion/dispute to ultimately impact US companies for the better; we are just not sure of the when and how much as of yet. Over the near-term, our opinion is that we could probably see an escalation of volatility and turbulence, but it is expected and not an issue that worries us long-term.
Until there is evidence that we should change our approach and move to higher ground, we stay the course!
There will be those investors that get wrapped up in the media and headlines and ultimately choose to exit too early-and that mistake will cost them. It is similar mistake to overstaying your welcome and getting hit by the next market crash. Both behaviors are made with emotion and not evidence or logic. This is the reason that the 20-year annualized S&P 500 have earned an average of 7.68% while the average investor was only 4.79%. 2
Ray Dalio of Bridgewater Associates, a $160B hedge fund outlined 3 recommendations for millennials, and the 3rd bullet point was the most profound... "do the opposite of what your instincts are."3 I think this should also apply to the common investor!
In today's world, it is getting more and more divided and difficult to discern truth through all the crap and crud you have to wade through in the media. I now have to use the BBC, NPR, Financial Times, and Bloomberg if I want to get to the truth in as unbiased a manner as I can. Of course, my own experience has taught me that having multiple sources, cross-referencing and dissecting, and being skeptical of all that you hear and read is a requirement these days.
Till we speak again...enjoy this beautiful fall weather!