President Trump has been in power for a couple of months and as an investor, the first thing you know is he has a bias towards higher stock markets, which suggests successful business will be able to grow bigger. As long as the company is within the laws, the government will get them leeway to do what they need to do. Under the previous administration, while the stock markets went up, there was always stricter regulations in the background to even the playing field for consumers. Sometimes what is good for the consumer is not necessarily great for the business.

In January, the President decided he loves tariffs and wanted to impose cross the board tariffs on its 2 neighbors and biggest trading partners. Given 4 years ago, the President had renegotiated the NAFTA agreement (signed when President Reagan was is office) to the USMCA and now was asking who negotiated USMCA anyways? (it was him). The President has the authority to implement tariffs, but I guess he forgot the other countries have a right to tariff the US. Given the complexities of the how trade works, to take advantage of every country’s economic advantage, there were going to be negative reactions to the American economy.

On February 3, the day before the tariffs were to take place, the stock market through all the institutional money ran their models and determined a trade war would cause all 3 countries to move into recession territory. Why the tariffs were going to be imposed, it was hard to rationalize and many new Secretary in the Cabinet tried to. What was the end game? Why did it need a blunt instrument to negotiate with your friends and biggest trading partners? Many other questions were unanswered, but the result was going to be higher prices, lower demand and recession in all 3 countries.

The stock market went down and after speaking with the President of Mexico and the Prime Minister of Canada, President Trump paused the tariffs, and his stated reasons were going to be addressed by the countries.

The real point of this column is doing his term, President Trump will do actions that will cause the collective actions of the stock market to go down, then the markets will bounce back quickly, when the real issues are understood. If this is going to be the pattern it is important to keep cash or cash equivalents, particularly from dividend regularly received. The pattern of stock market reacting falling and bouncing back means there is opportunity to buy stocks, from your homework, that are at lower prices. The stocks bouncing back and can pay a dividend means the total return is greater just by understanding the pattern of the President.

Linking to dividend paying stocks, when you receive the dividends, there is opportunity to do something with the money, It can be to reinvest, as long as you believe in the long-term future of the company, it can be to diversify your portfolio (which is a good idea when the market fell, how did your portfolio do, besides down, but how much down and what went up?) Dividends are a good thing to look forward to.

There are more questions than answers, till the next time – to raising questions.