This is about the stock market, not necessarily about my private life or yours. Could be there’s some carryover, though.
I know I do stupid things. And my 28 years of experience as a professional equity portfolio manager have convinced me that virtually all other portfolio managers also do stupid things, and on a regular basis.
To some degree, successful investors offset the clunkers that somehow slip into their holdings by selecting winners whose strong performance more than offsets the clunkiness of the clunkers. Or the winners outnumber the losers.
Nevertheless, it’s not an accident that there’s an old saw, “Ride your winners and cut your losers.”
In actual practice, however, this is a harder thing to do than one might think.
I’m writing this because I’ve had it in my head for some time that the substantial weakness in the dollar induced by the Trump administration (minus about 15% against the euro since the inauguration), coupled with the slowdown in GDP caused by tariffs and efforts to reduce the domestic workforce, have made publicly traded firms serving US consumers cheap enough to be attractive takeover targets for foreign multinationals. This would also be a convenient way of diversifying away from the the strong AI and semiconductor overweight my portfolio has had for the past year or more.
So far this hasn’t worked. Instead, the market has spread out, as I see it, anyway, into more derivative plays on the AI theme–still tech, but component suppliers, for example.
Why multinationals have no burning desire to increase their exposure to US brand names isn’t clear to me. To state the obvious, they either think the risks are too high or that chances are good that they can buy at lower prices at some later time. Either way, they seem to be saying that we haven’t yet seen the worst of the economic damage Washington is doing to the country.
To be clear, I don’t think the overall market is seeing things quite like this. Yes, it is avoiding companies hurt by tariffs, the sharp decline in the dollar and ICE activities. But it has also rotated away from pure software companies and design firms whose physical products are made by TSMC to component firms with manufacturing both inside the US and out.