My first full-time portfolio management job was with CREF. I started out with a portfolio of Australia/New Zealand stocks and after about six months added Hong Kong and smaller Asian market portfolios to that.

The woman I reported to managed the Japan portfolio, which in the mid-1980s dwarfed the rest of the international investing scene. Mai was a hard taskmaster but she trained me very well in how to see the bigger picture behind the ebb and flow of individual stock prices. Every morning there was a market quiz in her office. She would name a stock. I had to tell her: the closing price, the price change from the previous day, the trading volume, the brokers involved in both sides of the trade, how this compared with other stocks in the same industry–and what I thought the significance of the move was.

Early in my second year, she told me she was planning to leave the company. I asked her to let me help with the Japanese portfolio, so I might have a chance to succeed her. She said no. I left.

My next job was the turnaround of a small global portfolio which had had dreadful performance for a number of years and consequently was experiencing constant, substantial redemptions. My new desk contained about eight bottles of Pepto-Bismol and piles of stock charts.

The charts struck me as kind of weird visually. After a short while, I realized that my predecessor had depended heavily–exclusively?–on charts. He also liked stocks that had made horrible plunges but which appeared to be stabilizing. So brokers, being brokers, gave him what he was interested in. They manipulated the X and Y axes of the charts so they “showed” what he wanted to see–a steep plunge (stretch out the Y axis/shrink the X axis) followed by calmer waters.

Sounds kind of stupid, but this is rule #1 for charts–make sure you understand what the units of measurement for the axes are, and whether they’re linear or logarithmic.

–I happened to glance at the letters to the editor section of today’s Financial Times. One was from someone I don’t know but who seems to be connected to the equity money management business. The thrust of his letter was that the average investor in the Fidelity Magellan fund in its glory days of the 1970s only achieved a fraction of the market-beating returns delivered by star manager Peter Lynch. How so? The writer’s explanation is that most retail investors get in at the top and leave at the bottom–they are swayed, that is, by short-term impulses and end up much worse off for doing so.

My experience is that, provided the portfolio management structure is solid, this is typically what happens. Then I started thinking about the ARK funds. The first part is certainly true in here case. And there seem to have been very large redemptions this year. I think the key variable in whether to look once more at her part of the stock market is the degree to which her success was driven by interest rates declining to near zero. If so, how likely is that situation to recur?

That isn’t everything, though. Fidelity Magellan had its 1970s success in substantial part to not owning the large-cap Nifty Fifty, which spent the latter half of that decade–and beyond–deflating from the speculative bubble they were in prior to the big 1973 recession.

–an article on the facing page suggests Netanyahu is stalling negotiations for the return of Israeli hostages in Gaza in the hope that the lack of a deal will boost Trump’s chances of being reelected, and presumably that Trump will help him overcome his domestic legal difficulties. Hard to believe.

–for what it’s worth, I see Joe Biden as a gentle man from my father’s era, the 1950s, whose mental powers have faded in serious fashion during his time in office. The Donald Trump from last night (the same guy who bet the farm on the curious idea that vacationers would go to the NJ shore in February and who suggested that drinking bleach would cure covid–so never Einstein) seemed scarily unhinged. Not someone to have the nuclear codes.

Tariffs are taxes imposed by a country on foreign goods that are imported for domestic use. Theoretically speaking, they have two important uses:

–they can punish a company that sells goods in a foreign land at below its cost of production, in order to gain market share and/or damage local firms, and

–they can defend an important nascent local industry from competition while it builds itself to scale.

The reality is somewhat different.

Take the US auto industry. There have been import barriers put in place by Washington that have raised the domestic price of foreign-built cars for at least a half century. During that time, however, the market share of GM has shrunk by 2/3, from about half the domestic market to 17% or so, …with bankruptcy in 2009 along the way.

Then there were the Trump tariffs put in place to raise the cost of agricultural exports to China. The internet says Washington took in a total of $69 billion, $61 billion of which went to farmers damaged by the levies. China redirected its purchases of soybeans, for example, to countries like Brazil, which have been the (only?) winners from Trump’s actions. In 2017, Brazil exported about 25% more soybeans than the US. Last year, Brazil’s exports were double those of the US.

in the aggregate, Trump tariffs are estimated to have lost the US over 100,000 jobs and about 0.2% in GDP. Given that the trend rate of growth of real domestic GDP is a bit less than 1%, that’s a serious decline. The internet is guessing that the new tariffs Trump is saying he’ll levy if reelected will lower domestic GDP by .8%–meaning essentially no growth at all–and a loss of maybe 700,000 jobs.

No wonder Russian influencers are pushing his candidacy.

Trump Media merged with a SPAC in late March at a price around $40 a share. DJT quickly shot above $66 but has been fading since. As I’m writing this, the stock is around $18.50.

The enterprise selected Denver-based accountant BF Borgers to audit its books. Although Denver is a wonderful city and Colorado is a beautiful state (I lived in Manitou Springs for while after college), a Denver-based auditor triggers alarm bells for any professional investor. And, as it turns out, Borgers agreed in May to a permanent ban from the auditing business, after being charged by the SEC with “massive fraud affecting more than 1500 SEC filings.” Yes, a new auditor is in place. But experience tells me that it’s best to regard the as yet unaudited financials of DJT as more of an aspirational goal than a conservative view of company operations.

Two things jump out at me from the latest 10-Q:

–book value, which is a rough-and-ready calculation of what shareholders might expect to receive if the company were liquidated today, is less than $2 a share, and

–DJT is losing money–$16 million+ in the June quarter. This often happens with startups. However, a company that is making losses today will usually subtract from the number reported to shareholders the benefit it figures it will ultimately get from using today’s losses to shelter future income from tax. Not here, though–meaning that whoever is drawing up the financials doesn’t care to assert there will be future profits to use.

–although media voices are asserting that the selloff of the past few days is the beginning of the usual September-October market weakness, I’m thinking that it is more a reaction to the Nvidia (NVDA) earnings release. That’s because it’s too early for the fiscal yearend tax planning by mutual funds that creates the downward pressure. I’d expect, too, that as ETFs, which typically don’t have the same tax issues as mutual funds, continue to replace mutual funds, this downward market pressure will become less important as a market phenomenon. Btw, in the pre-mutual fund days, the market weakness came later in the year–because the tax year for banks and insurance companies ends in December vs. October for mutual funds.

–The NVDA release itself made explicit what could already be easily deduced from analyzing past quarters’ results–that the company’s gross margins have reached a peak at about 75%. TSMC also announced months ago that it was raising its prices.

The reaction to the release illustrates what I think is the current market paradigm–fast reaction to actuals rather than anticipation of them by veteran analysts. I can see the brokers’ thinking–analysts are expensive, quirky and a recurring cost. If AI can generate, say, 60% of the revenues good analysts are capable of, and have fewer ups and downs and cost close to nothing, then they may generate a far superior ROI.

–although I’m a growth investor, I’ve been increasingly finding myself drawn to GARP-ish (GARP = growth at a reasonable price) stocks and the occasional deeper value idea as well (I even took a small position in Intel–something I’ve since thought better of and sold the stock–recently). I haven’t set out to become defensive but my holdings have ended up that way–which is typically me semi-consciously preparing for a sideways market to come

–I’ve been spending a considerable amount of time photographing in eastern PA, where I live part-time and in a hotbed of Trump support. There are far fewer Trump signs around now than there were four years ago, though. Also, the red and blue colors on the 2024 signs seem to have faded very quickly.