Short Thread: The Market Selloff & Macro Investing factors:
1) If you're feeling jitters about the current market & selloff, here's a text laying out my thesis that I sent to a few friends yesterday.
Worth the read to understand the factors at play...
1) If you're feeling jitters about the current market & selloff, here's a text laying out my thesis that I sent to a few friends yesterday.
Worth the read to understand the factors at play...
2) So a lot of investors today look at financial numbers alone, and I think that's VERY short sighted in today's connected world. I use a ton of different things to form my decisions, whether it be politics, weather, history, market etc...
3) Its called macro investing bc I put all these metrics together to gauge macro forces rather than just balance sheet or NPV.
So let's go through some of the forces:
So let's go through some of the forces:
4) 1. Political- Xi is forcing Chinese back to work already. Chinese ppl traded their freedom for the stability of communism. If you look through the turbulent history of china you can see why. But just like Saudi, CCP has to provide for their ppl or their will be regime change-
5) Saudi pays their citizens from oil, so none of them work. Saudi, UAE & Qatar funded most of the anti-fracking orgs in the US bc they knew if oil prices fell too far & they couldn't pay their ppl, they'd see revolution...
6) Same premise in China right now - Xi & CCP are literally fighting for their life. The chinese economy is already on the ropes, so if they can't come back quickly they're done.
@POTUS has been incentivizing US co's to break from China since 2016...
@POTUS has been incentivizing US co's to break from China since 2016...
7) Had this happened a year or 2 ago it'd be a diff picture, but I think we'll be ok. Also POTUS knows he needs to be able to brag about 401k returns to campaign - he'll pull out all the stops...
8) 2. Investment: there is no other safe investment w/ good returns on the planet besides US right now. China? Hell no. EU? Nope...
9) US investors have gotten used to double-digit returns, so if money managers & institutional investors go all to bonds, and only give their investors a 3% return this quarter or year, they'll see massive withdrawals- and they know it...
10) 3. Fundamentals: @POTUS has made structural changes to the US economy in ways we've not seem before. The fundamentals are still there, esp as we bring manufacturing back to the US. It can't stay down for long...
11) 4. Pricing: I think a lot of investors were taking profits & wanting to buy back at a lower price.
The downside is that, w/ a diversified portfolio you pay fees to sell and buy, so it can rack up fees...
The downside is that, w/ a diversified portfolio you pay fees to sell and buy, so it can rack up fees...
12) But most money managers charge fees for each, so they're taking in extra fees from their customers as well as buying the dip.
Long story short: the market got jitters, but political & fundamental need for a strong US market are still there...
Long story short: the market got jitters, but political & fundamental need for a strong US market are still there...
13) It will bounce back, and likely rocket higher than where the drop began.
Most importantly, @realDonaldTrump told us it's nothing to worry about. Despite the media going all-out against every one of his claims, he has yet to be wrong.
Most importantly, @realDonaldTrump told us it's nothing to worry about. Despite the media going all-out against every one of his claims, he has yet to be wrong.
