Since it looks like the tariffs on China are going to be with us for a while longer, I thought it would be prudent to take a look at how this may affect GDP (gross domestic product) going forward as this is an important determinant in stock market prices. I came across the chart below that shows the projected GDP reduction from tariffs based on LPL Financial GDP growth projections.
I came across this chart that I thought I would share. It is nothing I didn’t know, but seeing it on paper is rather really illuminating. Sure, putting your money in Treasuries seems safe from a credit stand point, but there is a cost with today’s rates so low.
I recently read an interesting book entitled “Fooled by Randomness” written by Nassim Nicholas Taleb. It basically postulates that randomness or luck plays a bigger part in investing – not to mention in life– than most people realize. It is something that I’ve personally experienced over the years.
My long time readers and clients know that I am a big believer in contrarian indicators. In essence, it is not following the herd. As Warren Buffett states “Be fearful when others are greedy and greedy when others are fearful”. If you look at the chart below, only a little more than half of US adults are invested in the stocks even after a long bull market.
I thought I’d take a moment to think about where the stock market has been and where it may go. We’ve come a long way since those dark days of 2008 and 2009, when it looked like the whole financial system was going to break apart. It seems to me that this has to be one of the most underappreciated bull markets in history. I like that.
I’ve been listening to a lot of Wall Street “experts” saying that we’re stuck in a 2% growth rate due to demographics. The premise is the aging Baby Boomer generation is not consuming as much as they get older thus hurting growth of the economy because it is approximately 70% consumption. Sounds reasonable, doesn’t it?