Are You Ready for the Financial Crisis of 2019?
nytimes.com
nytimes.com
Long position.
I think we’re officially in bear market territory, but they’ll be alright. Lots of companies will be fine. We’re going to see a correction next year, and the beginning of a shift from growth stocks to value stocks.
These articles do get tired. Yeah, we’re gonna see a correction, and it’s not gonna be the end of the world.
PayPal and Adyen - payment cos very consolidized now and only get bigger every year with more commerce moving online
In the most recently reported quarter, Q318, the S&P 500 saw Earnings growth +28% Year-over-year (IBES) and Sales Growth +8.5% Year-over-Year. On a forward looking basis (the more important indicator), estimates for 2019 are currently at Sales Growth +5.6% Year-over-Year and Earnings growth of +8.5% Year-over-year (which is a more normalized trend, remember tax-cuts will become a head-wind in 2019).
IMO, the two biggest risks to the market, 1) China Trade Deal, 2) Slowing of Raising of Interest Rates. If you see progress in either of these, I think you'll see the market follow in suit. In terms of what's currently priced into the market, I'd say that a more pessimistic scenario is currently being priced in and thus risk/reward favors the upside.
IMO, the markets have a psychological component to them and the fear of an upcoming recession can cause a recession. So, these articles are like adding fuel to a fire, "Recessions have psychological and confidence aspects. For example, if companies expect economic activity to slow, they may reduce employment levels and save money rather than invest. Such expectations can create a self-reinforcing downward cycle, bringing about or worsening a recession." [1]
Finally, I think the following excerpt, written by a former Morgan Stanley Equity Research Analyst, does a great job at explaining how one might approach analyzing the news:
"Be skeptical, very skeptical, and even more skeptical. Great analysts rarely accept anything at face value. ... Good Analysts always challenge what they've been told or given. Over time, if a source of information proves accurate, let it into your circle or trust. If we include the financial press, and everything distributed by companies, I'd say at least 75% of the information out there for consumption is misleading or omits an important piece of information relative to the topic." [2]
[1] https://en.wikipedia.org/wiki/Recession
[2] https://www.amazon.com/Best-Practices-Equity-Research-Analys...
All our allies will turn on us. We will be engaged in more and more wars. The economy will rank, jobs will disappear, and every social benefit we’ve built over the last century will be eradicated. That’s all I’ve heard since Trump got on our radar. And so far I look around and none of it’s come to pass.
It’s the boy who cried wolf. Maybe the economy will take a nose dive. Maybe. But I’m done investing myself in the major reporting channels. They’ve demonstrated to me that being accurate or reflective isn’t even an afterthought for them. They’d rather stir the pot for financial gain and then absolve themselves of responsibility. Not a behavior I’m going to invest my beliefs into any further.
To many, Trumps foreign policy seems to be centered on breaking down Western order in favor of despots and not from a strategic perspective in favor of American interests but entirely his own financial schemes.
Just about everyone from his administration has resigned, is in the midst of some investigation despite the Republican Party owning all branches of government, or both.
There have been over 30 indictments related to the various investigations the last time I checked.
The market has recently been wiped pretty hard. Issues are student loan debt are only getting worse, with the education secretary openly supporting predatory lending.
I haven’t even gotten to the environmental rollbacks.
I’m not saying the media is on Trump because they stand on some moral pedestal, but I do think something is seriously messed up, orthogonal to what any journalist or entertainer claims.
The thing Trump has succeeded at is propaganda. If only not for immigrants whether legal or illegal, it would be like the good old times when blacks were slaves or at least had to use separate water fountains. Hispanics and Muslims are supposedly parasites. I’m just repeating the things I hear my staunchly pro Trump colleagues say at work at a very Republican company (energy).
I have one coworker who literally said she’d support Trump even if he was found to be working with Russia the whole time. She believes he’s the only one who can protect us from Shariah law.
I think there are several real issues in this country. My personal politics are fiscal conservatism while being socially liberal. I’m now a democrat although I voted against Obama twice because the Republican Party has become the party of blind nationalism led by a conman with a deemphasis on critical thinking.
As if the CIA didn't prop up "despots" back in the day. There was no Trump when the US was supporting Pol Pot or the brutal East Pakistan regime.
However that’s basically a form of desensitization, and you end up speaking up for yourself in cases that are only obliquely related to your core grievance. People notice that and it starts to dilute the message.
I don’t know what the solution is, except I guess to make sure there are spaces where women and environmentalists can speak and really be heard. I’m not sure how much of that would be necessary to balance out the volume of “don’t care” they get, but probably a lot.
I’ll add: I’m not trying to say women or environmentalists are uniquely swamped. Other people including men can experience the same thing for many reasons.
I guess in that regard, maybe the thing to do is just generally make sure EVERYONE around you is getting heard. It doesn’t cost anything but a little time. You don’t even have to agree with them.