Thursday, August 31, 2017

This Week's Message: Please, Quit With the Ifs! It's "When" -- And -- More on Trade...

"So, Marty, what'll you do in our portfolio if the market suffers a correction?" How does an adviser answer a question (a common question, in fact) like that? It's like asking someone, "what'll you do if it starts raining while you're driving your car?"

Well, for one, it's absolutely (at some point) gonna start raining while you're driving your car. And, for two, save for some torrential downpour that has you not seeing the road, you'll do little more than turn on your windshield wipers and maybe slow down a bit while continuing on your journey. If you lose a little time on your way, maybe you'll accelerate when the sun breaks through.

I'm thinking I can skip the otherwise obligatory stats on the frequency of corrections, their unpredictability and the dangers of messing around with them. If you need that, last week's video kinda goes there.

Now I'm trying to think of something pithy to share that'll send you into the weekend thinking wow, our investment team is really on top of things. Hmm.... well.... often, at the end of a month, we make it easy on ourselves and offer up the titles to each entry in our monthly trends file. Problem is, this month's has 169 entries (and there's a few hours left to go)! Either August saw a massive data dump, or we've had way too much time on our hands (assume the former). So, no, not this month (if you're disappointed, I'll take care of you at the end). Allow me instead to say simply that, nothing, on balance, occurred in August that has us deviating from our cyclically bent sector targets.

So, for this week, given that international commerce is such a hot topic these days, and -- as long-term subscribers are fully aware -- that's a hot button for us, we'll devote the rest of this week's message to the importance of free trade (both in terms of, well, our freedom and -- more pertinent to our purpose herein -- investing). 

For starters, here's a link to an article we posted last weekend that's received kudos from a globally known and respected economist who's infinitely smarter than yours truly:

The opening paragraph:
As the rhetoric heats up over trade, please remember, a "trade deficit", actually a "current account deficit" is only meaningful in accounting and politics. In the real world, we absolutely know that no country would ever allow the trading of its resources and the fruits of its labor for goods and services of lesser value. Meaning, for example, the Chinese would not be willing to enter into a deal wherein they send us $500 billion worth of stuff during the year in return for a mere $150 billion worth of stuff, plus a bunch of green pieces of paper. Not unless they were certain that those green pieces of paper could be used to acquire stuff of sufficient value to make the entire deal work for them. Oh, and by the way, those green pieces of paper I'm referring to -- those U.S. dollars -- would be claims against U.S. stuff.
Here's a quick video we did way back. Although the story is timeless:

And, more pertinent to the investment process, this one from last July discusses the importance of thinking and investing globally:

In closing, assuming there's somebody out there who actually wants to see the 169 titles in our August file, we'll snip them for you and insert below (click to enlarge). If you actually read them, and find a title that you'd like the underlying data on, shoot me an email and we'll get it to you. 

Have a great weekend!

August Trends File:

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