I was in the Army from 1968-72. That’s a long enough time ago that perhaps my experience back then is no longer relevant. But I did a lot of different things, though, including winning a year-long, all-expenses-paid trip to tropical Asia, where I was a platoon leader and later on a battalion intelligence officer. In civilian life, I was an equity portfolio manager. But I also spent well over a decade managing a group of securities analysts and running a small mutual fund and pension fund complex. I mention this mostly because it strikes me as odd that I might have both more military and general management experience than the current Secretary of Defense.

From reading about the US attack on Iran, I get the impression that the administration did very little actual planning or analysis before committing troops. I don’t believe that the analysis cupboard was bare in the Defense Department, though. I presume that the White House either didn’t ask for intelligence or ignored what it didn’t like. After seeing years of conflict in the Ukraine, it can’t come as a surprise to anyone that the weaker party would use lots of low-cost drones. I am surprised a bit that we’re already running out of rockets to intercept Iranian drones, as well as that the US intercepts cost 80x what the Iranian attack drones do.

It shouldn’t be a shock, although it appears to have been one to the White House, that Iran would try to close the Straits of Hormuz. Or that the intelligence we used was so old/inaccurate that we blew up and killed a school full of children, thinking it was a military installation.

Courageous troops, but a clown car of high-up leaders.

Weirdly, Republicans are blaming Biden, who left office 14 months ago, for the US strategic oil reserve being empty today. Maybe he also left the front door of the White House unlocked back then or didn’t empty the garbage …or maybe he didn’t put the current registration sticker on a White House license plate. Yes, his fault back then, but…

The more relevant question is why the reserve has remained unfilled for the 14 months since, or why no one thought to refill it as much as possible once the White House decided to attack Iran.

From an investment standpoint, I find it hard to become interested in oil and gas stocks. There are, for me, just too many unknowns. For a long while, I’ve been thinking that US-based valu-ish consumer companies with well-established brand names would be natural takeover targets, given the weak dollar preferences of the administration that have made them much cheaper in foreign currency terms. The big issue that has arisen since, however, is that the US is not only the land of the free and the home of the brave heroes of WWII. We’re now the land of white nationalism and of ICE imprisonments, deportations and killings. no one knows whether we’re at the low point, either. So I suspect that we’re back to the winning formula from last year: tech, domestic companies with costs in $US and revenues elsewhere, and to non-US firms.

The keys to equity market success in any given year are almost always easy to see after the fact. Figuring things out in real time, however, is another matter.

Last year was arguably an exception. The Trump administration had, and still has, I think, two main goals:

–the political/cultural objective of stemming immigration from elsewhere in the Americas and removing immigrants who are already here. Because GDP growth comes from having more workers and from productivity gains (better education/better machinery) shrinking the workforce reduces the potential GDP growth. Dumbing down the education system has the same effect, I think, although with a much greater time lag.

–1970s-style economic stimulation by lowering the short-term interest rate. As we saw back then (and as Trump, the real estate investo,r lived through) this tends to create inflation that reduces the real value of fixed-rate debt instruments. Foreign central banks, holders of immense amounts of US government debt, understand this very clearly. Their immediate reaction was to hedge their dollar exposure, causing a substantial decline in the world value of the US dollar.

So, the key to success in 2025 was pretty simple: arrange an equity portfolio so that costs for constituent companies were in dollars and revenues in foreign currency.

2026 won’t be so easy, I think.

This is partly because at some point the market pendulum will swing from focusing on concept to emphasizing valuation. My sense is that this is already happening now–that the lowest-PE stocks are having a day in the sun, without much regard for the base currency for costs vs that for revenues.

A second is the reputational damage being done to the US brand by what appears to me to be the use of military violence simply for the sake of violence. Critics argue that this is being done to shift attention away from the administration’s refusal to follow Congressional direction to release the Epstein files–and the subtext of Trump’s possible involvement. But, whatever the rationale, I think the reputational black eye this is creating has foreign multinationals hesitating to acquire US brand names and distribution networks.

Oil was trading at $115 a barrel overnight, a doubling since the start of the year. It has since slid to the current $95, still a significant jump, given the glut conditions that prevailed before the US-Israeli attack on Iran.

World stock markets have been sagging, with the US ably defending its last year’s position at the bottom of the pile among major world bourses.

If news reports are correct, the administration is preparing to send the 82nd Airborne into Iran, risking the beginning of another protracted and futile Vietnam/Iraq/Afganistan experience–of the kind Trump pledged would never occur on his watch. The war effort itself falls under the remit of Pete Hegseth, the Secretary of Defense, who, according to Wikipedia was confirmed by the Senate through a tie-breaking vote by the vice president, the first time ever there’s been such tepid approval for a Secretary of Defense, and only the second time ever for a cabinet member (the first being Betsy DeVos during Trump’s first term). I don’t know Mr. Hegseth. It strikes me, though, that he has a rather thin resume for the leader of the country’s combat forces. The age-old infantry leadership question is: if someone with no rank insignia on the uniform stands up and says “Follow me,” would anyone do it? I’m not sure how Mr. Hegseth’s initial address to assembled generals and admirals moved th needle for him.

There have reportedly been numerous complaints by US soldiers that some fundamental Christian officers are trying to motivate their units by emphasizing their religious belief that this war will trigger the second coming of Jesus. The general idea, as I understand it, is that as/when Israel controls the Middle East, Jesus will return to the world, defeat Christendom’s enemies and bring all the faithful back with him into heaven–leaving everyone else behind. What happens to the latter group, including whether it survives, is unclear. There has been a long-standing scholarly debate in Israel over whether to accept this “help.” Given Netanyahu’s Trump-like political situation, it’s understandable that he, too, wants a war.

There’s even a story that Iranian hackers have obtained tapes, apparently hidden by the administration, that implicate Trump in Epstein’s child sex-trafficking ring–and intend to release them. An irony, if true.

What to do?

For the first time in a long while, I don’t see an obvious path.

Given this, the most important thing, I think, is not to make portfolio changes simply for the sake of making change. It may also be a time to start to look more like the index, although, for now at least, I’m choosing not to do this.

I think the metaphor that the aim, conscious or not, of Trumponomics is to turn the US into a third-world country continues to be a dominant theme for investors. Result or effect may be better words, since it’s not clear to me that the administration understands this effect of its actions. Still, having costs in $US and revenues elsewhere probably continues to be a good thing.

Increasingly, though, the adminstration also seems to be publicly embracing a white Christian ideology that I think the world (correctly) sees as a very substantial sea change from the more traditional “shining city on a hill” or “land of the free and the home of the brave” ideas that have defined the US. A recent Hegseth speech illustrates the goal: creating a white Christian American spehere of influence that encompasses Greenland, Canada, Mexico and Central America …kind of like a gigantic South Africa in the Americas. ICE imprisonments, deportations and killings convey the general idea. What’s relatively new, I think, is the administration’s use of US military power to achieve goals that may make more sense for Netanyahu or Putin than for you and me.

This resetting of the US “brand” probably implies less tourism, less immigration of highly-skilled workers, less foreign desire to own US-made goods, and relocation of creators of intellectual property to areas beyond the reach of the US government. I’m taking Anthropic’s recent refusal to allow its tools to be used for mass surveillance of US residents as an illustration of this last issue.

My overall conclusions:

–become more focused on markets outside the US. I’ve already got a substantial position in Hong Kong-traded Chinese stocks. Continental Europe is, I’d guess, the next step

–try to separate economics from politics. For example, I believe the current ICE has no place in the land of the free and the home of the brave. From a stock market point of view, though, the main consequence I see is that its actions will shrink the domestic workforce to a degree that any domestic economic growth becomes difficult. Add to that the attack on education and the problem becomes worse.

–it seems to me that any stock market investor who wants to see earnings growth (as opposed to stocks trading at a discount to asset value) will be forced to look abroad.

Today’s job report shows a loss of 92,000 jobs in February. My conclusion from Trump’s overhaul of the department that compiles these statistics has been that we’d be receiving reports that “showed” the jobs situation as being considerably better than what the prior method would have produced. If the best the new guys can do is to show a considerable jobs loss for the month, this says to me that the domestic economy is in considerably worse shape than I’d thought.

I also find it striking that the Trump narrative on Iran has shifted so quickly from bombing to invasion.

Oddly enough, the US market is showing relative strength since the attack on Iran has begun. This seems to imply that the damage Trump’s Iran policy is doing to the rest of the world will be greater than the harm to the US. Presumably, this is because of Iran’s increasing production of easy to refine light sweet crude.

–The US stock market continues to be a world laggard, a position it has held since the inauguration, and one it is in for an extended period the first time in 25 years. Ex 1993, the US dominated the 1990s, as well.

–a recent Financial Times article discussed being like the US as an aspirational goal for governments in the rest of the world. What struck me is that, deliberately or not, it was written entirely in the past tense.

–My first company commander in the Army (Fort Carson, CO) was Lawrence Wissell, killed in combat in late 1968 during his second tour in Vietnam. He was hard on his subordinates, but I learned a tremendous amount from him about leadership. One of his favorite sayings was, “Everyone wants the privilege of command, but no one wants the burden of leadership.” i.e., unless you make it clear to the people you manage that you put their welfare ahead of your own, there’s no chance they will follow you when times are difficult. Both parties in Congress seem blissfully unaware of this.