What I did Wednesday

Since I am in the Philippines, I spent the day following the returns. As the afternoon wore on and a Trump win went from “could be” to “looks likely, is this really happening” to “there’s Wisconsin, its over”, I started checking the overseas markets. By evening the mini-crash in S&P futures was retracing so I was going down my list of companies that had hit my buy zone during the previous week.

I also had a macro view of the longer range. The Donald’s campaign included tariffs on Chinese goods (40%?). With already decreasing international trade volumes, I was thinking that I didn’t want to add to any company with Chinese market exposure or even a supply chain passing through the middle kingdom. I was again looking for U.S.-centric companies like Casey’s. I wanted to just ease back in. Based on market action and this China-view, I bought CASY, TWLO, GOOG, MITK, SHOP and AMN. GOOG is not U.S.-centric, I guess, but I figured that it is so big and in so many products that it seemed like a safe haven and I have been wanting to add anyway. The others seem to me to not be closely tied to trade issues (except of course for a recession caused by trade issues).
So, I’m o.k. with those purchases. Mr. Market told me that I am an idiot for buying AMN down 10% as it finished down 14%. I am sure this is related to Obamacare’s future. But I think I understand the company enough to hold the opinion that the hospitals are still going to be hospitals with patients and they will still need nurses and doctors and have strikes and will still need business services provided better by AMN than in house–maybe more so as rules change again…

But what happened to my other holdings. Well, banks benefited, to an unwarranted extent IMO. BOFI, SBNY up 7%, INBK up 4%. Because we will get 0.25% increase in December? Really? What about a recession caused by decrease in international trade? Unknown, crystal ball is broken just like those of the pollsters. GILD up 6%. Understandable, if pressure comes off prescription drug pricing. CLNE (compressed and liquified natural gas) up 4%. Infrastructure? Not sure where the benefit is for CLNE.

Then LGIH down 2%. O.k., interest rate concerns. BABA down 3%. China trade? From my viewpoint they sell within Asia, but I could be wrong. And then AMN, see above.

I kind of think that most of these first day reactions will retrace themselves. The anticipated causes with the presumed affects impacting company A’s business in a year or so seem tenuous. A gazillion things will happen in the meantime. Events are not so orderly.

For those who sold in fear of the election, don’t beat yourself up. You protected against a possible down market. You could have bought puts but at what cost? Many, if not most, of us have large percentage in IRA so the trading costs are low. I raised my cash before the last FOMC meeting because I thought the market was not pricing in the correct probability of a rate hike. Didn’t happen. But, I have repurchased many of those positions at lower prices. There will be volatility. Set your target prices and act upon them. Put in limit orders good for 60 days to take the “but maybe it will go lower” fear out of play as you get your hoped for volatility.

Good luck to all. Go hug someone, or maybe your dog. I am chilling some beers to enjoy as I watch what I predict will be a beautiful sunset behind the mountains across the bay. That is a more likely event than next year’s profits of BOFI and LGIH. :slight_smile:



But what happened to my other holdings. Well, banks benefited, to an unwarranted extent IMO. BOFI, SBNY up 7%, INBK up 4%. Because we will get 0.25% increase in December? Really?

No, it is not the rate hike at all. It is the Trump promise to reverse Dodd-Frank legislation. That’s big for the banks!!

Not that long ago, the Republicans were wanting to restore Glass-Steagall. If they get rid of protections instead, we’ll have another financial bubble of some sort, possibly of astronomical proportions.

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