Archimedes, the inventor/popularizer of the lever, is reputed to have said “Give me a place to stand and I can move the world.”

I choose to interpret this, rightly or wrongly, as meaning that I don’t need to know everything, or even a lot, about the way the world economy is working. All I need to have is some economic fact/hypothesis/development that I think is correct, and that I can monitor, to be the foundation on which to build my portfolio.

As a citizen, I’m disturbed that our national aspiration to be a shining city on a hill is in the rearview mirror and that we’ve elected a national administration of limited competence and cognitive flexibility, whose trademark move so far seems to be performative acts of intentional cruelty.

As an investor, though, simply thinking this gets me pretty close to nowhere.

my stock market approach today

We can break down real GDP growth into a function of:

–having more workers, and

–productivity improvements, meaning better education and better tools.

The administration’s attack on science education will most likely have no immediate negative effect, although it’s probably a long-term minus.

The more serious issue, I think, is Washington’s efforts to shrink the number of non-citizens working here.

The domestic workforce is aging, with growth at about 0.6% per year. We need capital investment + education to increase productivity and immigration to boost that to, say, +1.0%. At present, however, the administration has launched an attack on many of the country’s premiere research universities + discouraging immigration + very publicly arresting and deporting foreign students and workers already here.

So real GDP is being capped at around 0.5% per year. Who knows what the actual figure will turn out to be, but 0 for this year is as good a guess as any. Even if not, it’s my guess. I also think that there’s more downside risk than upside potential and that the way the tariff situation develops has the potential to make things worse.

This is my Archimedean leverage point.

In consequence,

–non-US economies will likely be stronger than the US, meaning multinationals will do better than pure domestic plays

–foreign markets will probably continue to outperform the US

–the dollar will likely be a weak currency. This is a plus for companies that make stuff in the US and export it, and a negative for importers. Maybe the best will be foreign firms whose business is purely outside the US. Generalizing, success =non-$US revenues and $US costs

–the US will likely be like swimming upstream. But discount retailers (the dollar stores?) and special situations (think: deep value) will probably be at least ok and maybe stars.