It has been an interesting few days since the tariff announcements and retractions by the Trumpster. Share market fluctuations have been sufficiently volatile as to resemble the ‘Big Wednesday’ which that stable of share market commentary newsletters has been predicting.
I have been sitting tight though. I know that my ability to predict the market on any one given day is not great, given my personal experience. Nor can I or any other rational individual predict what Trump might say or do next, nor how the markets might react.
And even if I were to subscribe (at what is quite a steep price) to the newsletter being spruiked as being able to help you make money out of this much volatility, there are two speed brakes on being able to profit too much. The first is the inevitable need to declare capital gains for tax purposes, which would be extremely tedious if we are talking about various small wins as the market ebbs and flows. The other is that if I were to liquidate most of my portfolio and then try to buy back in, my online broking account would not allow me to buy in at the same volume as I sold out, without me leaving a significant proportion of funds already sitting in the portfolio as collateral.
Which means I will be cautious and just sit, and resist the temptation to prematurely empty my emergency fund (which is not that huge at the moment anyway after all that money wasted on solar panels) into some share purchases.
What makes me a little more relaxed about this is two meetings I attended earlier this week.
The first was a luncheon at one of my Clubs on Monday, where the surprise speaker was a prominent recently retired economist, who made many sage and insightful observations both on his lengthy career, and on the current malaise. One major takeaway from his talk was that it was not principally the Smoot-Hawley Tariff Act of 1930 which greatly exacerbated the Great Depression (as I had been led to believe), but rather, that the Federal Reserve had reacted to the share market crash by drastically cutting the money supply.
I suspect that I have been poorly informed by the various libertarian leading economists I have read over the years on such matters. Not that this is enough to convert me from a Free Trader to a Protectionist.
An enjoyable event, with good convivial company (I was invited by one of my fellow Club members to a regular Wednesday luncheon), and lots of decent wine.
The other meeting was the Wilson Assessment Management investor information roadshow on Tuesday. Being the holder of 25,000 shares in WAM, their flagship listed investment company, I was invited. And being retired, with nothing more amusing or profitable to do on the day, I registered weeks in advance.
Let’s start with the free lunch – it was at the Sofitel in Collins Place after all. I quite enjoyed the sandwiches (high quality), salads, hot dishes, and deserts. No sausage rolls alas (as to be found at last year’s Insignia Financial AGM), and no wine (as at Treasury AGM), but all up I was satisfied.
On a more intellectual level, listening to the team of lead investment managers for each of the five or six LICs Wilson offers was most reassuring. Their theme, which they came up with before last week’s Trump tariffs, was ‘Ignore The Noise’. A very apt theme when you look at what has been happening.
There was a lot of talk on the practical implications of the economic decision making of the current administration, as well as some talk of insanity (I am not sure that the word ‘lunatic’ was used to describe the Ginger King, but it was at least implied) in how things are being decided.
Of course, since Tuesday, the tariffs have been temporarily walked back, causing the market to surge, and then, overnight, to fall again when fear and uncertainty replaced the optimism.
This is an insane time to be an investor. I can relax to some extent mostly because I am a home owner and my main asset is a defined benefit superannuation pension. The share portfolio is a pleasant bonus. My inclination is to leave my money to sit untouched in the share market rather than to trade. The only other rational alternatives in my opinion are to either liquidate and have the money sit in my savings accounts, or to buy a lot of gold bullion.
But the Wilson team did make many reassuring noises to investors about the best thing to do is to stay calm and sit it out. They were also promoting a new income product they will be floating at the end of the month, whose IPO closes today (WMX). I will be keeping an eye on it as I am interested, as I get older, in more investment products which will offer a regular income – even though my current pension is greater than what I took home when I was actually working.
But who knows what is to happen? Trump and his gaggle of advisors come across as somewhat crazy and unstable.
Lost For Words! 