The President of the United States of America opined:
The United States has a chance to do something that should have been done DECADES AGO. Don’t be Weak! Don’t be Stupid! Don’t be a PANICAN (A new party based on Weak and Stupid people!). Be Strong, Courageous, and Patient, and GREATNESS will be the result!
Here is a live look at my open orders for my brokerage account:
The last line is a completed purchase of shares in Diebold Nixdorf, which installs ATMs. Recently it expanded into self-order kiosks and electric vehicle charging stations. I’m making a long-term bet (albeit a small one) on this American company. I can’t claim credit for discovering this company because it came up in the stock screener I’ve used for many years. I’ve already lost ~8% on that purchase.
The sell orders are for companies I’ve held a year or more that are no longer listed in my stock screener. I should have sold them a while ago. I’m not an active investor and I only make trades when I remember my brokerage account exists. They are a mix of winners and losers which I thought were undervalued when I bought them. They are no longer undervalued in my estimation either because:
- Their financial situation deteriorated (a loss for me),
- The stock market adjusted its estimate to match or exceed my valuation (a gain for me)
- Or a mix of the above (
¯\_(ツ)_/¯).
I don’t enjoy losing money, but it’s better to sell a stock that I’d no longer want to purchase than to hope for improvement.
The rest of the orders are “Sell to open”, which means I’m attempting to open a new covered call contract. This is an advanced strategy in which I get paid a fee in exchange for a promise to sell a stock at a particular time for a particular price. These are “covered” which means I own the stock and can sell without having to buy shares on the market if the option is exercised. No matter what happens, I keep the fee.
The result is that I’m selling most of the upside of these stocks that might happen in the next month or two. I’m selling because there’s a good chance we entered a deep recession triggered by Trump tariffs. At this point there’s little that can be done to avoid recession since this one has been looming for months.
The Treasury yield curve has an uncanny ability to foreshadow recession. I don’t know of a good explanation and it doesn’t usually help when it comes to timing the market.[1] Normally people want to get better interest rates for 10-year loans than for 2-year loans, so there is something odd when the rates are inverted. My guess is that it’s a leading indicator because it’s correlated with a decrease in business investment. But whether this is the result of the inverted curve or the cause I don’t know.
In any case, I’m going to want cash to invest in America after:
- Interest rates return to normal,
- Trump ends his infatuation with tariffs and
- There are some good deals on the market again.
The stock market doesn’t really pay attention to it and prices often go up until they suddenly fall for reasons that can’t be predicted. It would not have been good timing to be out of the market for the last 6 months. ↩︎