Jonas Swedenborg is the pseudonym of a financial manager we know from college days. Every so often, we cajole him to writer a few words for the blog that will reflect the thinking of the Street without getting him into hot water. -- DL
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The market hates nothing more than uncertainty, and right now, we have a maximum of uncertainty. Heisenberg would be proud. I'll cite just a few concerns. Will China and the US get a trade agreement both can live with? Will Congress get its act together and ratify the new US-Mexico-Canada trade accord? Will the impeachment ordeal die slowly or rapidly? Will Bloomberg run and save the day? What will Putin do with all the oligarchy oil money the Kremlin has? How about Brexit? Will the Knicks ever again be competitive?
In the short term, the answer is easy. The market will fluctuate. In the long term, we are all dead. It's the mid-term that stumps us, like Sir Gawain when he takes up the challenge of the headless Green Knight. (You see, old boy, I remember quite well the class on medieval literature we took sophomore year with Robert Hanning.)
Conventional wisdom has it that if either Warren or Sanders seems in a position to win the Democratic nomination, the market will tank, not all in one day but over the course of six to eight months. The conventional wisdom is almost always wrong because people act on it in such a way as to avoid the predicted outcome.
At my firm [Jonas, Tarsish and Nineveh], we feel that a well-balanced portfolio, heavily weighted in favor of US equity funds (with a growth tilt) and solid blue chips (JP Morgan, Disney, Microsoft, Berkshire Hathaway, and Deere) will get you through any crisis except those we cannot yet anticipate. Remember: not even the mob, well-informed though they were, could have predicted the Castro revolution. It is amazing the effect this little island ninety miles away has had historically on the United States. Basically, we fucked up, which is why JFK got assassinated. But this is not the time or place for that discussion.
I'd stick to a 65-35 equities to bond ratio in my portfolio, with a bias toward dividend growth funds (the DRO ETF, for example), and intermediate-term municipals, always emphasizing that before starting you must make sure to have three years' worth of living expenses in the safest possible place (treasuries, savings account) no matter how boring and how skimpy the yield. >>>
I asked my old classmate what he thought of the wealth tax. This is what he said:
<<< The wealth tax is a crazy idea. It would be a bureaucratic nightmare. No one who tries it keeps it, even France. It has provoked outcries from savvy investors and entrepreneurs, who would be hit hardest by such a levy but who may also have a better idea of how the economy works than a Harvard law professor. Then the media, even the business-friendly media, declare that the billionaires are foolish to comment; they should keep their mouths shut as their statements help feed Senator Warren's narrative. (I hate what has happened to the word "narrative.") Nevertheless, despite the unprecedented political chaos and divisiveness of the moment, I'm reluctant to invest in emerging markets because of the geopolitical risk.>>>
