Trump and FIRE

[Nomad]

I'm slightly concerned that Trumps attitudes towards international trade
and tariffs is going to trigger circumstances that impact on my investments.

What is your view, is there a way of sidestepping the risks?

[TheWanderingScholar]

Honestly? Decoupling you assets from monetary value.

I.E. "Victory Garden's" for your own food, having a paid off assets such as your house, etc.

[Seppia]

There will always be exogenous factors that impact on investments, we cannot control everything unfortunately.
This said, TWS's comment above identifies what I would consider the best strategy.

Try own stuff that provides value to you regardless of what markets, prices, trade, etc do.

The most basic needs being water, food, shelter and a social life, you could try purchasing a place with some farmable land, ideally with a water well, and cultivate your network of friends/family.

[jacob]

This is mostly company risk as such trade wars are fought by proxy over specific industries, e.g. soy bean farmers, motorcycles, aluminum, ... so if you're diversified, you're not going to be hurt. Of course, trade wars are still destructive to overall wealth (2018 stock market has gone sideways) and over the long term (years), this would be apparent in currencies (exchange rates). Thus don't invest outside your own borders unless you're trying to hedge against your side losing.

[Mikeallison]

If you spend too much time trying to figure out when the next big one is coming you'll go crazy. I used to spend more time than was healthy on sites like zero hedge where the sky is falling daily. It kept me from being rational about investing for a long time. If it isn't Trump, or whatever the fed is up to that week, it will be some other economic bogey man, it always is.

My personal way of dealing with it:

I've found my mind and personality are not built for active investment, so I went the lowly index fund route. Because I face the risks to index investors Jacob talks about in his blog, I hedged, but in a different way. Like the above suggest I paid off all my debt. I also taught myself 90% of what I need to know to repair my home and vehicles, learned gardening, and how to cook cheap but still tasty/healthy (although I still struggle with the healthy part) I also purchased lots of high quality tools.

I know all this stuff probably sounds cliche at this point, but it works, the higher degree of self sufficiency you possess, the less the money matters, and since I'm debt free I can make a little go along way. The worst case scenario, my investments tank, I'll have to pick up a part time job at like 20 hours a week, not a big deal. I've been working off and on out of boredom anyway. It took me a long time to realize that investing is one of the least important aspects of the ERE thing.

[IlliniDave]

It certainly is frustrating seeing the volatility. Specific to trade I it boils down to how good or bad you think the situation is right now and what you think the administration's end game is. I happen to think the end game in what they are doing is to reduce trade barriers and manipulation by governments. I think the main/ultimate target is China who does seem to be leading the pack in practices that distort the idea of free trade. What will be key is seeing what the administration comes up with in terms of the outcome of the agreement to pursue an agreement the eliminates almost all of the barriers between the US and the EU. I think it will be the bell cow to where things go with NAFTA and trans pacific in the future. I don't think Trump wants to tack up a bunch of retaliatory tariffs and and walk away.

I don't worry too much about all the trade hullabaloo in the long run, sharing the attitude expressed in Mikeallison's first paragraph. People have been telling me the world is about to fall off a cliff since the late 1980s and if I flinched every time I encountered something to worry about I'd be cowering in the corner somewhere like a whipped dog. The ideas expressed above concerning diversifying away from complete reliance on financial assets is a decent one--so avoiding/eliminating debt and securing ownership of a place to live are some of the low fruit options available to put one in a position to endure temporary economic storms.

[Quadalupe]

If I'm not mistaken, the Permanent Portfolio was designed to (also) deal with these kind of situations.

[BRUTE]

tax cuts are good. some improvements on relaxing FDA regulation. so not all bad.

[jacob]

tax cuts are good.

Good for whom?

The corporate tax rate cut has mostly flowed into dividends (nice(*)) but also fueled more buybacks. Somehow, corporate buybacks always happen when stock prices are high and have ~0 expected ROI. It does boost the stock market, which is good for FIRE, but it also means it doesn't translate into economic growth since buybacks is essentially just shifting cash around on the balance sheet (an accounting exercise).

(*) The smart money is moving those dividends into bonds whereas the dumb money is just plowing them right back into stocks.

Consumer spending is similarly depressed not rising as quickly in 2018 as it did in 2017 and 2016. Basically, the poor use the tax cuts to pay off debt and the rich (FIRE) use it to leverage their portfolios to feel even richer.

More detail: https://www.thestreet.com/investing/tax ... y-14613720

Since the cuts don't appear to be creating enough economic growth to break even, this means the tax cuts are deficit funded and will be paid for by slashing the big government services (Medicare and maybe SS) with China making up the difference in lending the rest of the shortfall. Privatization of medicare and SS seem like a bad outcome for FIRE.

So overall... if you were already FIRE (especially FatFIRE), the taxcuts have been a bonanza If you're not and you're still working towards it, you're now paying more for stocks (your long term cash stream) than you otherwise would have had; and you will likely be getting less in terms of government health and pension services thus requiring you to work longer to save more

More detail: https://www.forbes.com/sites/johnwasik/ ... 45c444548f

TL;DR - The tax cuts are good if you're old and/or have a lot of investments. Otherwise, they're bad. People can do their own weighted sums.

[DutchGirl]

I'd say Trump's only end game is to increase his own money and power by all means possible. The US be damned, the world be damned.

So yeah, I'm also not very positive about what the world economy will do with that loose canon as top US boss.

[Peanut]

The tax cuts are unaffordable and ineffective and even Republicans know this, as those that are campaigning avoid talking about them on the stump.

I’ve recently become terrified listening to Peter Schiff predict a sovereign debt crisis and dollar crisis. Not really sold on his goldgoldgold mentality though. I would like to get some real exposure to developing economies, I suppose. I’d suggest starting there.

[prognastat]

I'm quite dubious on Peter Schiff myself. It comes across as he got a little lucky that he started predicting financial collapse shortly before the last big crash in 2007 and as such got a lot of notoriety. However he has now been calling for another crash for years and we all know as long as you keep calling for a crash eventually you are going to be right and it just seems like he is trying to match his former success and failing in it.

As for the gold stuff it comes across as self interest. He has money in gold going up so of course he is going to sell it as the cure. I agree with some of his criticisms on bitcoin, but feel he is somewhat blinded by his own interest in gold as sees it as the panacea that I doubt it is.

[TimeTravel]

I would not base my investments on anything Trump says or does. He'd have you buying and selling at the drop of a hat since he changes positions so often.

Better to follow an investment strategy (indexing, buy and hold, for example) than follow a hunch here or there.

[Kriegsspiel]

Muhamad El Erian says the US will win the trade wars.

[BRUTE]

Privatization of medicare and SS seem like a bad outcome for FIRE.

both are completely unsustainable in their current form, it's not "if", it's "when. there's no value in having a free ticket to a bunch of nothing. brute would rather be part of a properly financed medicare/SS system than one that promises free shit but has no money to pay for anything.