(Photo: President Trump and President Xi at the negotiating table.)
Working in the world of investments, it’s never desirable to say “I told you so” because nobody has a crystal ball and nobody knows the future. However, when it comes to some recurring themes I’ve written about on these pages, it’s hard not to say “I told you so” when it comes to at least a couple of issues of ongoing concern.
First, let’s talk about the news that is generating this latest “I told you so.” The leaders of the United States and China, Trump and Xi respectively, have come to what many are referring to as at least a temporary “truce” regarding the brewing trade war that has been waged between the two giant economic nations.
A temporary U.S.-China truce
Specifically, as of January 1, the United States will not issue new levies on Chinese goods. On the flip side, China has promised to buy more U.S. goods. And, according to Trump, on his most favoured platform of Twitter, no less, China will cut import tariffs on American cars.
This temporary truce is to last 90 days, a period where further progress on trade between the two countries can be ironed out, after which U.S. tariffs would rise from a current level of 10 percent to 20 percent.
Now the first “I told you so” comes from the fact that this latest easing of trade tensions between the States and China is just the most recent example of avoiding the hitting of the panic button every time President Trump engages in trade actions. This is what I’ve been preaching for months. It’s becoming a pattern. Trump makes aggressive moves internationally, everyone panics, and then things start to work out. This happened with North Korea. It happened with Nafta. It’s now happening with China.
Short-term news vs long-term analysis
That’s not to say that things can’t still blow up. Which leads me to my second “I told you so.” You know what the reaction has been to this U.S.-China “truce?” International markets are way up on the news. Again, this is probably an over-reaction to an initial over-reaction. People panicked when Trump raised tariffs, they’re now exuberant that a temporary easing of relations has occurred, for now. So, “I told you so” that the markets tend to act in a herd mentality.
So, the lesson in all this? Smart investors need to keep temporary news in perspective, always look at the long game, and only say “I told you so” when the facts keep suggesting it.
ASCEND GRP is an asset-management firm, with offices in Toronto, Richmond Hill, and New York, that services clients seeking investment opportunities worldwide.