Tuesday, November 29, 2016

How do you make money in the coming Trump administration ?

That's the question an acquaintance asked me yesterday.

Answer: Same way I do it every day. Avoid value traps. What those are it is up to you and your judgement. Why, Warren Buffet could care less that Trump comes to the office. Buffet stays put and knows how to play. He's steadfast, disciplined and calculated. Of course, you could think about which sectors will win and which will lose. Is there going to be a revival of the "old" industries, like oil, coal,  construction, [equipment] manufacturing ? Possibly, and related to the infrastructure investment initiative. Caterpillar (CAT) rose steeply in the last weeks and so did the private prison companies GEO and CoreCivic for example. Will renewables take a hit ? I don't know. The healthcare industry is in a nice bind, some pharma companies are poised to prosper with less regulatory oversight on drug prices. while others-hospitals, etc. stand to loose if ACA is repealed and they loose patients.

Repatriation of corporate earnings held overseas would be a welcoming relief.

Goldman Sach's 10 themes (via CNBC) are:
  1. "Expected returns: Only slightly higher."
  2. "US fiscal policy: A pro-growth agenda."
  3. "US trade policy: Concerns are likely overdone."
  4. "EM risk: 'Trump tantrum' is temporary."
  5. "Trump and trade: Hedge with RMB."
  6. "Monetary policy: Focusing the toolkit on credit creation."
  7. "Corporate revenue growth recession: Signs of inflection."
  8. "Inflation: Moving higher across DM."
  9. "The next credit cycle: Kinder and gentler."
  10. "The 'Yellen Call' 2.0: Now with contingent knock-in."
You get your pick.

Question: How good are those predictions ?

Answer: As good as a trap door on a lifeboat.
I think multi-asset managers will continue to do best. Overcrowding will continue, with the largest firms taking the largest share of profits.


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1 comment:

  1. At the 4th Annual Robin Hood Investors Conference you can see Kase Capital presentation here (Nov. 29th, 2016: http://www.tilsonfunds.com/TilsonRH16.pdf


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