It's been too busy to update blogs regularly. I note my last blog was almost 6 months ago! Since then Mr Trump has presided over chaos, triumphed over crisis and a new real-politic is born. It feels like Moscow on the Hudson or despots on the Potomac. Robin Williams made a good impression of a Russian emigre vanquishing adversity in New York. President Trump needs no such acting talent. His tax plan has put dollars into corporates who in turn have purchased more of their already ludicrously valued shares. The shareholders sitting on huge paper gains from 9 years of accommodative stimulus feel wealthy. An American 1st policy means more investment at home, borders and walls against emigrants and a Twitter barrage against adversaries abroad almost weekly. What to make of politics played as a talent show? The plot twists are too numerous and contorted to follow. A crazy mixed up world just gets crazier.
US stocks now boast P/E valuations which used to belong to speculation stocks in adventure and exploration. Multinationals who have disproportionately benefitted from QE, have got bigger, more powerful and more national (at least when it comes to Uncle Sam anyway). America has asserted its strength. The world can just watch in awe.
I've been attending some pharma meetings listening to the rise of digital. Amazon is coming to drugs. Microsoft is coming to health IT. Warren Buffet is joining forces to tackle healthcare, that last bastion of incomprehensible processes. The bigger it gets the more expensive it becomes. Intractable problems clearly getting worse into the future. It is depressing until you consider that this generation globally has more food and better healthcare than any other in history.
Regarding shares, Valeant have made a good job of cleaning shop and now the name that epitomised Pharma Casino antics is disappearing. A cosmetic and perhaps a cultural change of significance. They're probably worth a punt for a 3 year hold. All other US shares presently sitting in the firmament of unprecedented valuation are to be avoided. Not because they may increase in value, not because many, multinationals, hedged through geography and activity, will post continued revenues and profit growth over the next year. They are simply to be avoided because the game is officially musical chairs. The music will stop at some point and when it does, many will fall between stools. The nature of the physical world is ying and yang, profit and loss, tears and joy, youth and ageing. Nothing lasts for ever.
A strengthening dollar, turbulence in the middle east, a Korean chinwag between the two dear leaders. Computer algorithms which can dump stocks in milliseconds whilst retail investors use email and phone to try to get to the exits. Do yourself a favour. Cash in your stake - leave some playdough if you wish and sleep soundly over the summer.
The stimulus has begun to wane. It will show up in corporate earnings and interest rates eventually.