Trump is president...how can we make money?

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bryan
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Re: Trump is president...how can we make money?

Post by bryan »

Neil mentioned something about it depending on if the younger generation gets behind him? That's a big ask and more likely would have been Bernie.

jacob
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Re: Trump is president...how can we make money?

Post by jacob »

https://www.bloomberg.com/news/articles ... enthusiasm

Goes along with what I've said previously wrt to the post-honeymoon reaction to the election (the ultimate consequence of nulling trade agreements and seeking protectionism). The nerds would see the spread of the graph as the acceleration of market inefficiency (the difference or spread between popular sentiment and reason).

Personally, this [sentiment] has been high enough for me to write some covered calls in the past few weeks. First time since 2007. So far so good.

Dragline
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Re: Trump is president...how can we make money?

Post by Dragline »

Chad wrote:Neil didn't seem confident Trump was the Gray Champion. A shame. I'm not confident Trump will be a net positive, but would happily be wrong and for him to be the champion. Is he the guy that helps create the scenario that creates the champion? Hard to say.
I think he is cognizant of what he wrote in his book -- this person must be well-liked by the young to qualify and so far Trump just doesn't.

"The final Boomer leaders— authoritarian, severe, unyielding— will command broad support from younger people who will see in them a wisdom beyond the reckoning of youth."

Strauss, William; Howe, Neil. The Fourth Turning (p. 287).

He may be more concerned with the monster scenario:

"It is easy to envision old Aquarians as pillars of fire leading to the Promised Land— but just as easy to see them as Charonlike monsters abducting doomed souls across the Styx to Hades. Either is possible."

Strauss, William; Howe, Neil. The Fourth Turning (p. 288).

I thought his insight into the best market outcome for the administration would be an abrupt decline in financial markets now, or a surge, with the worst outcome for the next election being not much movement, was interesting.

Hedgeye is doing an "Inside Bannon's Brain with Neil Howe" presentation for their paid subscribers, which I imagine they will post to YouTube for free at some point in the near future.

Trump all of the sudden becomes a lot less interesting than the levers being pulled in the background.

Spartan_Warrior
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Re: Trump is president...how can we make money?

Post by Spartan_Warrior »

Is Hedgeye a right-wing thing? (Hah, why am I asking, it's finance.) Seemed like Howe was choosing his words carefully for the audience (could just be his speaking style, I haven't seen him talk enough). But I think he made his real sentiments obvious by reiterating that many expect Trump to be impeached within two years. Not to mention the point regarding support from the youth.

I'd lean more toward @Chad's supposition that Trump is more likely to become the catalyst (or one of the catalysts) of the crisis that leads to the appearance of the Gray Champion. Based on my own knowledge of Gen Y and my reading of the Fourth Turning, my impression has always been that the "return to civic-mindedness" that my generation supposedly represents will be embodied more by leftist socialism than right-wing fascism. Perhaps there's some of my own bias (or optimism) in that analysis, but I'd say how we voted holds this up. I don't see my generation broadly getting on board with the alt-right neo-fascism. Trump was chosen by boomers, not us. Hopefully he'll be their final victory. Best case scenario, the impending rise of fascism will cause a climax that results in a boomerang to the left and the fully automated luxury space communism we deserve. Either way, Orange Chump is no Gray Champion.

Dragline
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Re: Trump is president...how can we make money?

Post by Dragline »

The owner/main proponent of it, Keith McCullough, seems more of the libertarian persuasion (he's Canadian by birth), but has seemed more pro-Trump since the election. He does have that "raw, unfiltered, tell-it-to-you-straight schtick" about him that so many of my cohort (guys around 50) have fallen into and I'm afraid is now just looking like "older Gen-Xers trying to recapture the edginess of their youth." It's like a verbal comb-over. Others that fall in this category are Michael Covel (podcast) and Mish Shedlock (blog), but I think it originally descends from Glenn Beck as a motif, and its getting pretty worn.

But I don't watch it for him - he has assembled a useful group of commentator/experts in various areas that often provide useful and interesting information, including Howe (who is fiscally conservative and mostly socially liberal) and some General who is a contemporary of the new Sec. of Defense. He also occasionally snares people like Gary Schilling who have been around forever and have interesting things to say.

I don't see Trump have a huge attraction for the younger people either, unless he were to actually implement a real FDR-style jobs program for depressed areas. I can't see that happening at this point, though.

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Re: Trump is president...how can we make money?

Post by jacob »

https://www.nytimes.com/2017/02/06/busi ... stors.html

A rare public comment from one of the gods of value investing.

Chad
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Re: Trump is president...how can we make money?

Post by Chad »

Klarman is probably correct on all counts. The real question is how soon.

The point about higher volatility of the market with ETFs is probably valid and it will get worse. Bill Miller on the MiB podcast noted the same thing Klarman did and believes ETFs will go from owning a current 30% of the market to 70% of the market.
http://ritholtz.com/2016/11/mib-bill-mi ... egg-mason/

Also, you would think finance reporters would be better than this:
What investors say publicly and what they do in the markets can be different things. Mr. Buffett campaigned publicly against Mr. Trump, but he has nevertheless invested in the market since his election — about $12 billion, according to a recent disclosure.
Klarman and Buffett's investment timeframes are going to be vastly different. This will almost always be true of anyone compared to Buffett.

ThisDinosaur
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Re: Trump is president...how can we make money?

Post by ThisDinosaur »

“With any asset class, when substantial new money flows in, the returns go down,” Mr. Klarman wrote. “No surprise, then, that as money poured into hedge funds, overall returns have soured.”
How do you find out where the money is flowing?
To Mr. Klarman, “stocks outside the indices may be cast adrift, no longer attached to the valuation grid but increasingly off of it.”
Is he talking about private equity? Forgive my ignorance, but isn't every publicly traded stock in a Total Stock Market fund? Aren't they all in some ETF or another as well?

Chad
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Re: Trump is president...how can we make money?

Post by Chad »

Money flow into hedge funds? Hedge funds are required to file reports with the SEC.
Is he talking about private equity? Forgive my ignorance, but isn't every publicly traded stock in a Total Stock Market fund? Aren't they all in some ETF or another as well?
A lot of the stocks are in different ETFs/Indexes, but the percentage of the total outstanding shares owned by ETFs/Indexes varies. For instance, DOW stocks probably have the highest ownership among ETFs/Indexes given how popular the index is and the size and importance of those companies.

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Ego
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Re: Trump is president...how can we make money?

Post by Ego »

Dragline wrote: Hedgeye is doing an "Inside Bannon's Brain with Neil Howe" presentation for their paid subscribers, which I imagine they will post to YouTube for free at some point in the near future.
https://app.hedgeye.com/insights/57111- ... uthor-neil

Gilberto de Piento
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Re: Trump is president...how can we make money?

Post by Gilberto de Piento »

Here's a Twitter trading method that analyzes the sentiment of any Trump tweet that mentions a company and buys if positive or shorts if negative:

https://medium.com/@maxbraun/this-machi ... .ps1k0rcgm

The python code is on github:
https://github.com/maxbbraun/trump2cash/

I thought of the same thing back when he was tweeting against the aerospace manufacturers. I'm sure a million other people did too. It's great to see someone tried it.

Smart traders of ERE, how does this blow up? Why isn't everyone doing it?

Chad
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Re: Trump is president...how can we make money?

Post by Chad »

The Trump Twitter trade is already starting to get some holes. Macy's went up after Trump criticized it over dropping his daughter's clothing line.

Note: Just realized I put Macy's instead of Nordstrom.
Last edited by Chad on Fri Feb 10, 2017 12:25 pm, edited 1 time in total.

Gilberto de Piento
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Re: Trump is president...how can we make money?

Post by Gilberto de Piento »

You're right, it looks like it lost 4% on Nordstrom's (JWN) (scroll to bottom of page for results):

https://github.com/maxbbraun/trump2cash ... nchmark.md

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jennypenny
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Re: Trump is president...how can we make money?

Post by jennypenny »

I wasn't sure where to post this ... here, the Trump thread, or the fourth turning thread. I'll post it here since it's about Bannon like the previous links in this thread. I don't like the host of the podcast, but to his credit he does ask Howe directly whether Bannon's belief in the fourth turning will guide his decision making.

Neil Howe on Steve Bannon, Trump and the Possibility of an American Civil War

black_son_of_gray
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Re: Trump is president...how can we make money?

Post by black_son_of_gray »

@jp... and also at the Washington Post

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jennypenny
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Re: Trump is president...how can we make money?

Post by jennypenny »

Poor Howe. With all of the crazy attention on Bannon, and now his admiration of Howe's book, The Fourth Turning is morphing into The Populist Manifesto. Howe's trying very hard to reel it in, but the book could become forever associated with Bannon and Trump. Bannon admitted to using it as a playbook for getting Trump elected. If something dreadful should happen, I could see Howe getting some of the blame indirectly.

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jennypenny
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Re: Trump is president...how can we make money?

Post by jennypenny »

getting back to the OP ...

Does anyone think Trump's immigration stance will negatively affect Munis, particularly what looks like an unavoidable confrontation with so-called sanctuary cities? I've kept a bit of cash in muni funds over the last year and I've been very happy with them. But now I'm worried that the immigration fight combined with the pension crisis might damage them. OTOH, raising rates will help them a little.

I could talk myself either way on this one. I love the tax benefits and monthly distributions of munis. I used to use mREITs for regular income (and the div was high enough to offset the tax burden) but the interest rate uncertainty scared me off. Maybe I should look at those again. I have some traditional REITs in the healthcare sector (the only REITs I see capable of growth going forward).


Second question ... will the repeal of Dodd-Frank mean that BDCs will get hammered by competition from banks?

IlliniDave
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Re: Trump is president...how can we make money?

Post by IlliniDave »

jennypenny wrote:getting back to the OP ...

Does anyone think Trump's immigration stance will negatively affect Munis, particularly what looks like an unavoidable confrontation with so-called sanctuary cities? I've kept a bit of cash in muni funds over the last year and I've been very happy with them. But now I'm worried that the immigration fight combined with the pension crisis might damage them. OTOH, raising rates will help them a little.

I could talk myself either way on this one. I love the tax benefits and monthly distributions of munis.
I just did my taxes this afternoon and the exempt interest was one of the few bright spots of the day.

Specific to Trump, I don't see any meaningful adverse affect on munis from his immigration policies. I don't think there will be any long-term "standoff" between the feds and certain blue states.

But then again, I rarely try to outguess the market. I have a pretty decent stake in munis and intend to add to it this year. If I'm still alive, my expectation is that I'll still be collecting income from these bonds (actually mutual fund shares) 20 or 30 years from now. With that sort of time horizon, all the standoff nonsense should be just a blip.

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Chris
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Re: Trump is president...how can we make money?

Post by Chris »

jennypenny wrote: Does anyone think Trump's immigration stance will negatively affect Munis, particularly what looks like an unavoidable confrontation with so-called sanctuary cities?
Trump's ability to cut off funding to sanctuary cities is much more limited than he says. First, there are legal limits to what the federal government can do to coerce states and municipalities, and most of that power lies with Congress anyway. And then there's social pressure. How will it look if Trump cuts federal law enforcement grants to NYC in the name of national security? It's hard to even think NYC without thinking 9/11. And Chicago: how would he square cutting their funding and also reducing the homicide rate (one of his ongoing pledges)?

There are other bear cases for muni bonds though. A sharp reduction in tax rates or elimination of the AMT will make muni's tax advantages less beneficial. Though I'd expect bond holders in high-tax jurisdictions (NYC again) still have plenty of reason for holding.

There's also speculation out there that tax reform will include eliminating the tax-free nature of muni bonds at the federal level (in exchange for an overall lower tax cut). I'd bet against this idea, since it runs counter to another Trump priority, which is infrastructure spending. Since states and municipalities handle most infrastructure, whatever plan there is will include them needing to spend money.

Dragline
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Re: Trump is president...how can we make money?

Post by Dragline »

Attempting to cut off federal funding for particular cities or states "because you don't like what else they are doing" is probably unconstitutional or at least violates the statutes establishing the benefits and programs themselves. State AGs would sue in a heartbeat and probably win.

I agree that changes in the tax code are much more likely to make munis less attractive than anything on immigration policy. But I am doubtful there will be any significant tax reform any time soon, especially if healthcare is the priority, and it will be corporate-focused when it comes.

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