Wish Trump would warn me before he tweets

I wish President Trump would warn me before he tweets !!!

Trump’s Thursday tweet about Mexican tariffs came after the market close…as expected, stocks were down significantly on Friday.

So is this time to fear?  I don’t think so.  US corporate profits are sound and international valuations are below average- the time to buy isn’t at the top, it’s when investors are fearful.  As I mentioned last October (listen here:  https://www.wealthsteading.com/276  ), the problems with the current market are not EXISTENTIAL threats (like diminishing natural resources), but rather issues of government(s) policy.  Course can be changed with the stroke of a pen…or a 280 character tweet.

As such, I remain cynically optimistic because I see two long term outcomes:

  1. Trump’s policies work and the market goes up.
  2. Trump’s policies fail and he changes course or the next president does…and the market goes up.

As a long term investor, ultimately I think it’s a good idea to buy into the market on “dips”…CAVEAT: as long as the economy isn’t headed into a recession.  With interest rates extremely low, money easily available, and the Feds more likely to cut interest rates than tighten- I don’t see a recession on the immediate horizon.  This is the case I’ve been making for two years.

The S&P500 closed slightly below its 200dma, but with only slightly higher volume than average, and below average volume for the week.  Not exactly a head for the exits panic.  My interpretation of Friday’s sell off is that it was more of an “algorithm jerk” reaction to headlines than a smart money selloff.

So why didn’t I add to my positions on Friday to take advantage of the dip?  My watch list was ready; however, all afternoon the market kept moving lower and yet the VIX barely moved above 19.  A fairly tame VIX was more evidence to me that this wasn’t a smart money selloff, but was also an indication that there wasn’t widespread capitulation (usually the sign of a market bottomed).  I’ll wait to see if this week starts out with a “black Monday” selloff.

In any case, I decided to wait, and will most likely make some additional purchases this upcoming week.  Stay tuned for more details.

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