Shit Storm on Horizon

Ouch, careful what you wish for, no?  I just was talking in the last post that we need a good old-fashioned correction to make the stock market more investable, and wallah, a cool 10% decline in a couple of days, with more to come most likely.  The market was at 38,000 just 1 year ago so to dip past that point quickly seems quite in the realm of possibility.

The tariffs are going to be tricky for construction.  According to an article I just read, construction materials sit at 41% higher than they did in February 2020, which seems about right to me.   There is no doubt prices will be impacted, but how and when is another story.  That uncertainty will definitely impact demand for construction services, renovations and new builds.   Shit's expensive.

I guess the goal could be seen as ‘leveling the playing field’, and through brute force forcing other countries to eliminate their tariffs on us.  I don’t think there is anyone with a brain that thinks jobs for making T-Shirts and Iphones are coming to America anytime soon.  The lack of an articulable strategy makes things worse.

If most of America thought high prices and inflation was a big concern, you have to wonder what they are going to think when they are taking it on the income side with loss of investment value and taking it on the expense side with all prices going up, a lot.

People are freaking.  You have a whole set of finance guys who have ridden a stock market wave from 17,000 to 44,000 in 6 years.  They are in no way built for what’s coming their way.

The only question will be how much leverage (or borrowed money) is in the system, so as prices decline, margin calls and forced selling accelerates.  You never know who is wearing pants until the tide goes out they say.

Even the Covid era didn’t have the width of cost increase impacts this will have.

Just another season in the business life.  My guess is there are some opportunities coming for those with some dry powder.  But panic is in the air, as people have chased returns, and ignored the lack of diversification even in the big ETFs as the Mag 7 exploded in value.  I’m ready to buy into this down turn, but you don’t want to be trying to catch a falling knife so it’s hard to know when to dip back in.  If nothing else, maybe this will convince some folks who should have moved out of equities long ago based on their age to finally wake up and de-risk, albeit 18% less wealthy than 2 weeks ago.

I was lightly bummed, a low simmering wave of regret, that I sold last two Ashokan homes at the first offers that came through in January, since the market has only heated up since then, with inventory decreasing to stressed levels.  I’m sure I could have gotten more.  But then something like the last two weeks ago, and it reminds me of why I’ve survived in this business for 25 years - I take deals when they come my way.  I find a way to do the deal, I monetize and move on.  So instead of sweating it out trying to close a deal or find a deal, I’m sitting on the cash waiting for an opportunity to announce itself.  One in the hand is worth two in the bush type of thing - I definitely subscribe to that line of thinking.

Getting ready to hit the les tres valles (the 3 valleys) in the French Alps, 3 hrs south of Geneva, with my wingman nephew and his older brother.  So I like to fly in style so was excited to take a Swiss Air business class flight across the seas but here this morning when I checked, double checked and then checked again my flight, I was confused why I got a ‘select your meal’ email from United since I wasn’t flying United.  Turns out, even though I booked a Swiss Air ticket, got a Swiss Air flight number and all things on the ticket said Swiss Air, I’m actually flying United with United staff, planes, etc…. Super weird, this ‘cross marketing’ partnership where you book with one airline and end up on another.  That might be cool if you are flying Newark to Tampa, but a long haul business class flight is part of the fun.

Now, don’t get me wrong, I”m sure United Polaris will be fine, but I’m tired of Americans and I’m sure the Swiss would have been thinner and more pleasant.  I understand this is a first world problem to the extreme since United Polaris is pretty kickass, but still, what a bait and switch - I went back and investigated a lot of the emails, confirmations, etc.. and have yet to see the smoking gun that would have made this switcheroo clear. Even when I google the flight number, you have to have eagle eyes to see this ‘operated by’ tradeoff.  At least it wasn’t American!!! (I know, that’s mean).  I guess this might be old news to some people, but not to me.

So I finally put humpty dumpty back together again after 2 years of effort, and then a world-wide tariff calamity trade war happens.  Just another day at the office where you start to expect the unexpected and definitely start to get the idea that smooth sailing just really isn’t in the cards.  It could be a real estate crash (2009), could be Covid, could be the worst client-people you hope never interact with again, could be a health issue of an important team member (or a member of their family).  Some shit show always forming in the distance making its way to my sunny day.