If one of the most famous economists of all time could not profit from top-down economic forecasts, then how in the world could the average investor do any better? It is far easier to analyze a company and determine whether it is a good business worth investing in than to try to figure out what economic growth will be in a year and what that means for investing today. This may sound counter to what Wall Street says, but investors need to remember that Wall Street is in the transaction business.
One of the keys to a successful life is to keep one’s focus on what he or she can control. We cannot control what this administration does or the reaction of the masses that are wreaking havoc on the markets; We can control how we react, and in the long term, that will be the most important factor.
Will tariffs be the end of us? I am reminded of my college microeconomics professor, who liked to say that the economy was stronger than any government. I would add that both the economy and the market are stronger. Tariffs and the threat of tariffs have caused uncertainty, and contrary to the motto, they have actually put America last. On the surface it would seem that my good professor and I are wrong; however, one needs to look deeper.
It seems at least one of Trump’s economists is telling him that tariffs are a wonderful way of stimulating domestic growth and raising revenue for the government simultaneously. This is a protectionist’s dream. The problem with dreaming is that eventually one wakes up. Tariffs have never been a good idea and they still are not. The laws of economics are what they are; trying to fight them never works out well.
We limped to the finish but 2024 was still a good year. What does that mean for 2025? There is lots of talk about the low odds of the market having three big years in a row, but that is all talk; no one who has actually looked at the data would come to that conclusion.
