Make it stop.
As the conventions of finance, trade, governance and geopolitics crumble all around us, a sense of Trump exhaustion is setting in.
We just had the fourth most volatile week for stocks in the past 60 years. But really, it’s been endless chaos in financial markets since last fall, starting with the run-up in stocks that coalesced with Donald Trump’s re-election.
From there, we had the threats to impoverish and take over Canada, the imperilling of the world economy via senseless global trade war, the brief wave of elation at its partial undoing, until panic set in once again over the growing rift between the world’s two superpowers.
And what was the net effect of all that on the stock market? Nil.
The S&P/TSX Composite Index was up by 0.05 per cent from mid-September to Thursday’s close.
Investors who tuned out and did nothing over that time would be no worse off. Had you hung on Mr. Trump’s every whim, you’d be far more likely to make a serious mistake that puts your financial health at risk. Fear is an intoxicant. Perpetual outrage isn’t sustainable.
By all means, change the channel on this dreadful psychodrama, or at least turn down the volume. You’ll be saner and quite possibly richer for it.
We are only 90 days into the presidential term. There are at least four good reasons to unfollow Trump in the 1,370 days left in his bewildering reign.
The signal-to-noise ratio is way too low
There’s a school of thought that investors who pay too much attention to the stock market are setting themselves up for failure.
We are hardwired to loathe losing money. And on any given day, the stock market’s likelihood of declining is basically a coin flip. Those immersed in the daily volatility of the market subject themselves to a compounding emotional toll.
Long-term, the fluctuations are meaningless. Over spans of decades, the stock market rises by an average of 8 or 9 per cent a year, almost infallibly.
This is the signal that ought to guide investor behaviour. But the deafening noise of the moment clouds their judgment.
Research shows that those who follow their portfolios religiously don’t do as well. One often-cited (though possibly apocryphal) Fidelity study found the best-performing investors over a 10-year period were those who either forgot they had accounts, or were dead.
It’s the same with Mr. Trump. He’s all noise, no signal. Listen to him at your peril.
We are in a time of radical uncertainty
Ours is now a world where the President can launch and cancel an all-consuming global trade war in a matter of hours. Who’s to say what’s even possible any more?
Radical uncertainty, according to the 2020 book of the same name, concerns events so poorly understood that forecasting is pointless. Like when a single social media post can trigger a year’s worth of stock market movements, and trillions are erased, added back, and erased again in the blink of an eye.
“In such a world it becomes difficult to make long-term investment decisions, since such strategies require some degree of predictability about the future,” financial writer Felix Salmon said in an online post.
Risk is no longer quantifiable. There is no clarity to be found in the President’s impulses.
You will never trade it correctly
Cast your mind back to a year ago. Now, say you were forearmed with the knowledge that Mr. Trump would win the presidency and would aggressively turn on U.S. allies, including Canada and Europe.
How would you trade on that information? Hard to imagine many would invest heavily in European stocks or bet against U.S. technology. Even Canadian stocks have outperformed U.S. stocks over the past year.
Most investors are terrible at picking winners and losers in the best of times, let alone whatever you want to call the times we now find ourselves in.
Trust that it will all fall apart
Mr. Trump has managed to do a lot of damage in just three months – economically, financially, and politically. It can be tempting to despair over what he might accomplish in four years. Hard to look away from that.
But the forces that oppose him are building by the day. U.S. consumer and business sentiment indicators are tanking. As are Mr. Trump’s approval ratings. A domestic recession is now in the cards. Inflation is building. How long before corporate America and Trump voters turn on this administration?
Meanwhile, dissent is growing within the President’s own party and even his inner circle. This past week Elon Musk called Mr. Trump’s senior trade adviser Peter Navarro a “moron” on social media.
So, feel free to tune out and leave these people to the mess of their own making.