When markets decline 2% and the next rise rise 4% one has to wonder whether investing through algorithms has reached a point of insanity.
The stock market came about to provide capital and liquidity for companies seeking growth. Those who were true investors sought dividends and long term appreciation. Technology and hedge funds have gone a long way towards turning investing into gambling. An investor assumes a risk whereas a gambler creates a risk. Investors may see their investment go down in value but they still can benefit from the income stream until such time as their investment recovers in value. When one gambles generally nothing remains should events go sour.
Hedge funds initially were devised so one could go long and one could sell a comparable stock , ie. you could buy GM and short F. The premise being GM would go up and F would go down and you would benefit from the spread. The degree of leverage was not a large factor.
Economic fundamentals, as I recently wrote, are basically favorable. However,, political events and excessive reactions have been driving the markets.
Perhaps we will look back and see yesterday was like a Pepto Bismol Day and companies with decent balance sheets, stable growth and a favorable dividend policy will come back in vogue.
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I am thinking of adding "a pile on Trump" segment to my memos:
Yesterday the New York Times, on their front page, attacked Trump for avoiding service during The Vietnam War because he allegedly got a doctor to declare he had bad feet or weak ankles. The article offered nothing factual.
Sounds more like a weak article but then The New York Times has become a Trump bashing sensationalist journal more like the Enquirer
Then, he was attacked for suggesting to a 7 year old girl that perhaps it was time to give up believing in Santa Claus. He has replaced Gingrich as the Grinch.
The problem is the young girl initiated she had doubts but the mass media did not reveal this fact.
Trump was also accused of being the first president in 16 years not to visit the troops and he was able to read this story while in Iraq with his wife. They were there visiting troops. He is returning with a towel so the editors of that accusation can wipe the egg off their faces.
He continues to be attacked for leaving Syria, removing Mattis earlier than Mattis was willing to leave and for continuing to attack Powell who chairs The Fed. Trump's economic advisor said Powell is not being fired so the market jumped 1000 points, the most ever after collapsing over 600 points the previous day the market was open.
Finally, the mass media continue to report about the government shutdown and blame Trump and yet,America remains afloat. Anyone working for the government, who might get a delay in receiving their check, can get an interim job because the demand for unfulfilled positions is the highest in history.
The minimal shutdown is partially related to funding a wall to deter illegal immigration but Pelosi cannot allow this until she is elected Speaker so gamesmanship and blamemanship continues unabated.
Nothing Trump does deters the haters from attacking him.
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Bret takes issue with Trump on Syria as it impacts Israel. (See 1 below.)
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Dick
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1) Donald Trump Is Bad for Israel
As usual, the president makes his predecessors look better.
By Bret Stephens
Suppose you’re the type of smart conservative reluctantly inclined to give Donald Trump a pass for his boorish behavior and ideological heresies because you like the way the economy is going and appreciate the tough tone of his foreign policy, especially when it comes to Islamic fundamentalism.
These last few weeks haven’t exactly validated your faith in the man, have they?
You can track the performance of your I.R.A. as well as I can mine, so there’s no need to dilate on the broad rout in the markets (Wednesday’s gains notwithstanding). But let’s focus on something possibly as dear to your heart as it is to mine. The president has abruptly undermined Israel’s security following a phone call with an Islamist strongman in Turkey. So much for the idea, common on the right, that this is the most pro-Israel administration ever.
I write this as someone who supported Trump moving the U.S. Embassyin Israel from Tel Aviv to Jerusalem, and who praised his decision to withdraw from the Iran nuclear deal as courageous and correct.
I also would have opposed the president’s decision to remove U.S. forces from Syria under nearly any circumstances. Contrary to the invidious myth that neoconservatives always put Israel first, the reasons for staying in Syria have everything to do with core U.S. interests. Among them: Keeping ISIS beaten, keeping faith with the Kurds, maintaining leverage in Syria and preventing Russia and Iran from consolidating their grip on the Levant.
Powers that maintain a reputation as reliable allies and formidable foes tend to enhance their power. Powers that behave as Trump’s America has squander it.
But leave that aside and consider the Trump presidency from a purely Israeli standpoint. Are Israelis better off now that the U.S. Embassy is in Jerusalem? Not materially. The move was mostly a matter of symbolism, albeit of an overdue and useful sort. Are Israelis safer from Iran now that the U.S. is no longer in the Iran deal and sanctions are back in force? Only marginally. Sanctions are a tool of strategy, not a strategy unto themselves.
What Israel most needs from the U.S. today is what it needed at its birth in 1948: an America committed to defending the liberal-international order against totalitarian enemies, as opposed to one that conducts a purely transactional foreign policy based on the needs of the moment or the whims of a president.
From that, everything follows. It means that the U.S. should not sell out small nations — whether it was Israel in 1973 or Kuwait in 1990 — for the sake of currying favor with larger ones. It means we should resist interloping foreign aggressors, whether it was the Soviets in Egypt in the 1960s, or the Russians and Iranians in Syria in this decade. It means we should oppose militant religious fundamentalism, whether it is Wahhabis in Riyadh or Khomeinists in Tehran or Muslim Brothers in Cairo and Ankara. It means we should advocate human rights, civil liberties, and democratic institutions, in that order.
Trump has stood all of this on its head.
He shows no interest in pushing Russia out of Syria. He has neither articulated nor pursued any coherent strategy for pushing Iran out of Syria. He has all but invited Turkey to interfere in Syria. He has done nothing to prevent Iran from continuing to arm Hezbollah. He shows no regard for the Kurds. His fatuous response to Saudi Arabia’s murder of Jamal Khashoggi is that we’re getting a lot of money from the Saudis. He speaks with no authority on subjects like press freedom or religious liberty because he assails both at home. His still-secret peace plan for Israel and the Palestinians will have the rare effect of uniting Israelis and Palestinians in their rejection of it.
Is any of this good for Israel?
If you think the gravest immediate threat to Israel is jihadist Hezbollah backed by fundamentalist Iran backed by cynical Russia, the answer is no.
If you think the gravest middle-term threat is the continued Islamization of Turkey under Recep Tayyip Erdogan — gradually transforming the country into a technologically competent Sunni version of Iran — the answer is no.
If you think that another grave threat to Israel is the inability to preserve at least a vision of a future Palestinian state — one that pursues good governance and peace with its neighbors while rejecting kleptocracy and terrorism — the answer is no.
And if you think that the ultimate long-term threat to Israel is the resurgence of isolationism in the U.S. and a return to the geopolitics of every nation for itself, the answer is more emphatically no.
During the eight years of the Obama presidency, I thought U.S. policy toward Israel — the hectoring, the incompetent diplomatic interventions, the moral equivocations, the Iran deal, the backstabbing at the U.N. — couldn’t get worse. As with so much else, Donald Trump succeeds in making his predecessors look good.
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