It seems to me that markets are finally tiring of tariff shenanigans. After starting the day fairly strongly all indexes, but in particular NASDAQ and the S&P500 are cratering big.
This is not a political statement, but just an observation that markets like some degree of certainty and tariffs being on then off and now back on again is not providing much certainty–now we are slated to have tariffs kick in on March 4th-will they or won’t they actually happen?
Well I guess I am just going to sit tight for now–all accounts have minor red today, but even with interest rates holding steady we could hit a ‘toss the baby out with the bath water’ moment so no use exposing myself more today. Also we have the PCE coming tomorrow morning.
Users who liked this:
The SP500 P/E ratio is actually
29.32…….
The SP was up
26% in 2023
25% in 2024
Is that shenanigans or bubbles??
Major Banks instead of lending are buying government bonds. Even in China where Government paper is trading at historic lows.
When credit contracts the small privileged class of asset owners. Run towards safe haven country markets, US treasuries, and Gold to protect their long term wealth.
Hence Gold and US dollar are moving up at the sametime.
Once US interest rates/dollar goes down, wars end, and major governments stop announcing policy changes on the weekly (uncertainty premium), and oil prices return to $55-65 range. All the money will be redeployed for more productive purposes.
micah-
Your thesis is interesting. Please report from time to time on its progress.
Do not be concerned. Republicans are considering a budgetary measure to extend the tax cuts so that they will cost $0.
https://www.cnbc.com/2025/02/28/republicans-consider-major-budget-change-to-obscure-deficit-impact-of-extending-trumps-tax-cuts.html
Wow,
This is actually quite hilarious and I’m certain 50% of the populace can be convinced it solves the problem.
Reminder..
If market moves bother you, you do not have the right asset allocation.
Stormy Weather Westie
Absolutely true. On average every 5 years there is a bear market and average decline is about 35%. Length average about 10 months. Mentally would suggest do not have more equity in your portfolio than one can tolerate if equities go down by I would suggest 50%. It is just the nature of equity markets.
Westie,
I realized this a long time ago and it’s why I’d rather take a 6% CEF prfd at A+ or better rating instead of reaching for a BB+ at 7%.
It’s also why I had purchased AAA munis for 40% of my portfolio.
However, it doesn’t square at all with how I made my nest egg, which was leveraging M&A deals. Those require a bullish stock market. deals fall apart many times in a bad tape
Nobody knows the truth on what drives markets.. with that said, I will give my biased take. Just thinking the markets have given some more consideration to the extreme valuation levels, ie priced to perfection. WMT P/E of almost 40x, FICO at 60, COST at 60, TSLA at something absurd..
Marine the article 2WR linked to from Market watch was too long winded. Could have been condensed to Market uncertainty and spread the risk around.
I noticed the same thing about P.E. multiples looking kinda scary. Ignore it as it doesn’t seem important until it does.
Spread the risk around sounds great, but what are you going to invest in that isn’t going to take a hit along with everything else.
Charles:
“What are you going to invest in that isn’t going to take a hit?”
CD’s, short-term T’s, short duration prefs
Low risk, low return
Markets go up markets go down for whatever reasons and I react accordingly. If they move because of daily news blurbs then I am content to let it happen then play the opposite side.
Or maybe it got tired at trading 25X earnings? Or realized $2,000,000,000,000 IRA $3,400,000,000,000 Build Back Better, $4,000,000,000,000 American Families Plan, $2,300,000,000,000 American Jobs Plan….MIGHT be running out and have to be paid for??
Markets do not like uncertainty, ok. But geez is this even a correction yet for the S&P (10% decline)? Nope. Less than half a correction. I guess if S&P 500 not constantly hitting new highs panic can strike. Well who knows? But am willing to bet the S&P within 5 years will make new highs. Am firm believer in Random Walk, ultimately earnings will dictate market and suspect over years the US economy and companies in the stock market will grow.
Did you write this too, Tim?
“Trump’s trade war has rattled investors. It’s time to make this ‘uncertainty’ a permanent part of your financial planning.”
https://www.marketwatch.com/story/uncertainty-surrounding-trumps-trade-war-is-actually-a-good-thing-yes-really-humor-me-1feb81bd?mod=home_ln
NVDA down big after a blowout quarter also spooking market; means we may have run out of buyers.
So yesterday- NVDA running a little pos today.
It’s a political comment but not a partisan comment.
Smith’s Wealth of Nations was a commentary on “Political Economy.”