Focused Investing Perspectives #31
Elections, markets, economy, etc
Perspectives This Week
We are seeing lots of expectations that the control of both houses by the party of president-elect Trump will have big consequences. An article in Barron’s today speaks of the return of “unfettered capitalism” (which left the USA about 150 years ago).
The first problem with this view is that the degree of control is not large. In the house it the GOP leads 211 to 200 with 21 close races still undecided. The 53-46 GOP edge in the senate may seem large at first.
The first two-years of many presidential terms feature control of both houses. This has been true recently for presidents Clinton, Obama, Trump, and Biden. George W. Bush had such control in his second term.
But if you think back here is the thing. All of those presidents had trouble pushing through much of their agenda through to law. Obama probably did the best at that, and he had Nancy Pelosi and stronger than normal majorities in both houses.
There are two things about all this. The first is that nearly every initiative has many interested parties in opposition to whatever the proposed change is.
This includes not only big donors but also lobbyists and others who get to know the congressional staffs and make their arguments in private. I’ve been one of those people.
Long before that I was working in laser fusion during Regan’s first term. The administration zeroed the budget each year, but congressional staff who saw it as important convinced their legislators to put it back. Then in Regan’s second term the administration decided that laser fusion was a perfect example of research the government should fund. Go figure.
On top of that there are usually district in which the voters strongly oppose whatever it is. A congressman in particular risks his or her career if they do not respect the strong feelings of their constituents. These dynamics make it very difficult to avoid desertions on whatever the president hopes for.
I read some coverage of Obama’s early interactions with congress. His point of view was “I won by a big margin so you have to do what I say.” The response was “Not so fast, Mr. President.”
Presidents are not dictators, the campaign ads notwithstanding. Whatever happens will be slow and often watered down.
Then there are pundits who think they know what this means for the markets. Our member JaxBill provided some really nice perspective in the chat:
The outcomes in 2016 were nothing like what investors originally thought. The market sold off after [Trump] was elected only to completely reverse course after he reduced corporate taxes. Recall that the energy sector imploded after Biden was elected, then went on to have a terrific year. One just never knows. Even if Trump gets everything he wants from Congress, there are always unintended consequences. My bet is that there is going to be at least one Trump Trade that we'll look back on a year from now and laugh.
I’ll take the over on that.
Recent News (Drawing my attention)
Forthcoming:
I’m now thinking of doing newsletters most weeks, but without a “story” at the front. Instead, members seem to value my perspectives so I will offer those.
At the moment, I’m finishing up a deep dive on Alphamin (AMF:TSX and AFMJF: OTC). Beyond that, not sure but it will be something.
Personal News:
Our October wine dinner, last week, featured the wonderful wines from a boutique producer in Napa, Sequum. Not cheap but incredible values.
The warm late fall is finally turning cool. First snow is late but will be soon.
Member News
Recent material has included the following.
Items that went to all members:
Previews that are part of paid deep-dive articles. I try to make them meaty enough to be worth reading.
Items that went to paid members, often including a free preview of most of the article:
Deep dive articles on Orion Office, Anglo American Platinum, and Brixmor Property Group
Brief notes on Q3 disclosures by W.P. Carey and APA Corp.
Paid members have access to the Focused Investing chat. A highlight this week was lots of interaction on Q3 earnings disclosures.
The Google Sheets (for annual members):
The main attraction on the Google sheet is full disclosure of my live, real-time portfolio. If you are an annual paid member and do not have access, please contact me.
There are also a REIT assessment sheet and a Midstreams assessment sheet, each a tab.
Also:
One can also post items of interest on the Focused Investing chat, which I do often. Check it out and post your own items, please. Comments and questions are always welcome.
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That is a great picture of Otsego Lake. Thanks!!
Investing in a company that has its main asset as a tin mine in DRC is not in my purview. I know many larger comp have mines in "scary" places but that sort of concentration risk is not for me. I hope Trump clears decks of several government agencies., irrespective of experience. It needs to be done. While it certainly looked like the republicans would control the house a few days ago we'll see. Allowing a week after the election to count votes in a close election is ripe for fraud from either side.