Stressing

A few years ago, with real estate in a climactic state, Ted and Amber sold their GTA house for big bucks and went down to the water. Bought a boat. Forty-footer with the inside space of a two -bedroom condo. They now pay a relative pittance to moor and access services, and invested the rest. Close to two mill.

No incomes now. No pensions save the wrinklie pogey. So the nestegg has to last as long as they do.

It was all going peachy. Or ducky. Until Tuesday.

“I don’t consider us to be rich,” he says. “My wife describes us as “wealthy”. Trouble is we don’t feel wealthy. Comfortable for now perhaps but will it last? With Trump in power in the US and Fascist Cons poised to win here what is there on the horizon but trouble?”

“Combine the above politics with the threat of climate-change driven societal collapse sometime in the next decade or two and what can one do but duck and cover? Spend lightly and protect the nest egg seems to be our approach.

“At the age of 73 I am hoping I kick the bucket before things get truly ugly but if Trump follows Hitler’s game plan the concentration camp fences will go up next May. Will Musk tamp him down? Will the GOP yank Trump on a 25th amendment move and they go to Vance who may be worse? Who knows? A part of me says we are invested and the oligarchs will not want the US markets to tank so we are on the correct side of the fence. We hope.”

As we all know, the Trump Trade started in earnest while ballots were still being counted. The US equity market had an orgiastic Wednesday, with the Dow adding 1,500 points and the S&P heading for more historic heights. The richest few US billionaires made $64 billion more that day. This included Trump and his new BFF, Elon.

In fact, everyone with a proper B&D portfolio, American equity exposure or shares in Elon’s car company – and this includes Ted and Amber – made bank.

But in the last day or so the Trump Trade has started to be rethought. There are certainly doubts. Most agree the agenda 47 triumphed during the campaign (big tariffs, big tax cuts, big deregulation) would bring fatter deficits, higher debt and more inflation. In the long run, not sustainable.

For 2025 most agree, however, it will be party time. The S&P 500 will cruise past 6,000 soon (never before), the GDP will stay in the 2-3% range (quite nice), unemployment will hover near 4% (close to an historic low), wages and incomes will rise (now increasing at 4.6% – twice the cost of living), inflation will stay about where it is, and the Fed will keep cutting – although less than expected.

In short, it should be a good year for billionaires in the Trump cabinet, and for wee folk who invest. (By the way, the S&P is up 26% this year and the TSX has added 18%. And here you have been dissing Biden and Trudeau…)

But what about Ted’s dark fears? Concentration camps? Climate collapse? The Childless Catlady-killer assuming power ?

Anything, as we now know, is possible. But in order to have peace of mind, you gotta make some assumptions.

First, Trump won’t do everything he said. America cannot pull off a huge drop in corporate taxes and the elimination of personal taxes on tips, overtime or retirement incomes at the same time spending is ramped up on the military. Economists are warning this could add $10 trillion to the national debt over the next decade. Ditto for the deportation of 11 million people. Not feasible. Not affordable. And the hit to the labour pool would be huge. Moreover, imagine the reaction of the entire world to America – the beacon of civilization forever welcoming the huddled masses from overseas oppression – herding millions of newcomer families into razor-wire enclosures. Ted, pal, it ain’t happening.

Will Trump try to diddle with the Fed? Probably. But boss Jerome Powell bravely said yesterday the president would have to wrestle the central bank from his cold, dead hands. He’s not quitting and won’t be fired. There until 2026. At least one adultwill be left in the room.

Will Trump continue to stack the Supreme Court? Yes. The people’s last guardrail against excessive executive power has been removed.

Will Trump throw Ukraine under the bus? Will the US weaken NATO? Will Taiwan have reason to fret? Yes to all. Vlad Putin’s a happy guy this week. America seems ready to turtle into an isolationist role – and that dramatically increases the potential for global realignment and conflict.

Will Trump focus on goosing equity markets, enriching American corporations, fostering full employment, gutting regulations, feeding cowboy capitalism, and enabling those tech billionaires who lifted his campaign? Yes. Siri and Alexa will reign. Tesla. AI bots. The Mag Seven.

Will Trump exacerbate climate crises, be irrational, unpredictable, continue to undermine fact-based media, let crypto run wild, risk a global trade war and recession, escape jail and grow more extreme? Probably.

But, Ted, don’t stress over what you cannot control, influence, alter or change. Over time humans have coped with heaps of trouble – world wars, 20% interest rates, terrorism, nukes, disco, pandemics – and those who stayed steady did fine. Trump will probably swell your equity portfolio for the next year or two as the US economy responds to more stimulus. Later we can deal with the inflation and instability which may follow.

Hey, I see Melania’s back. If she can stomach him, so can you.

About the picture: “Here is Chuckie, my rehomed olde English Bulldogge,” writes the poster known as GGulf Breeze, “pondering the new administration down South. The chilling reality of a crazy new president requires a warm fire, or a stiff drink. Thanks for many years of entertainment and advice.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2024/11/08/stressing/