March 2019 Finds
Podcast Time:
α γ → Well worth the hour to listen to such a wise and knowledgeable and successful value investor.
Articles and Quotes:
Latest memo from Howard Marks: Political Reality Meets Economic Reality
https://www.oaktreecapital.com/insights/howard-marks-memos
α γ → A great explanation of why tariffs are stupid.
First, there’s misunderstanding. The U.S. runs chronic trade deficits with most of its trading partners, and with China it amounted to $335 billion in 2017. Trump takes these deficits to mean our trading partners are winning and we’re losing. “We have countries ripping us off for years. . . . We have trade deficits; they have surpluses.” In particular, he says “China’s been killing us,” suggesting there’s something nefarious about trade deficits. But is that the correct inference? The other day I went to the barber for a haircut, and when I paid him, I ran a trade deficit. He got my money, and I got a haircut. I didn’t feel like I had lost. Likewise, Chinese businesses make money from the U.S., and U.S. consumers get the low-priced goods they want. Both sound like winners to me.
Ideas:
Amazon Hits $2000 and the Stock Market Takes a Dive
α γ → Last time Amazon (AMZN) hit its high of a few bucks over $2000 in early September 2018 the stock market proceeded to go on a rather precipitous decline until Xmas of approximately 30%. According to the trendline of Amazon’s ascent since it will again hit $2000 in early-to-mid May 2019. Will this again signal a significant market downturn? Is Amazon a market harbinger? Somewhat conspiratorially, we might argue that with Amazon having gone down to $1400-ish at Xmas and within 6 months regained a solid 25%+ Wall St will be ready to once again take their profit and have a massive sell-off which will once again drive the overall market down significantly. Is this kind of wave what we are going to see for the foreseeable future instead of the long run bulls (5+ years) followed by huge bear recessions (50% drops)?
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