[DrVenture]

Originally Posted by BlkGS

A drop on margin does not necessarily mean it's going to be a 1:1 drop in stock prices. Especially if it's an across the board thing. The progressives often talk of a "great reset", this is that sort of thing where the market just has to accept.

I don't have a million dollar portfolio at my age. The average American doesn't either, nowhere close to it. You're not going to find much sympathy from people who complain "myillion dollar portfolio is down $37k because apple has to build in the US". Frankly you're not going to find much sympathy from average Americans for anyone who has aillion dollar portfolio losing even like $200k in value from changes across the board.

The reality is, what's good for wall street and what's good for Americans are two different things. We just saw a massive statement of that. Despite a stock market that's got people who were heavily invested flush with cash, the average person sees the economy in shambles and struggles to get by. The middle class doesn't give a damn about your stock prices, they want better paying jobs and lower costs, and frankly the only way to do that is reduce how much is returned to shareholders or paid to top leaders.

It isn't about sympathy, or nominal amounts. It is about sound economic strategy. One cannot reduce margins without impacting stock prices. A small earnings miss can impact a stock price far more than a 1:1 ratio. When the risk/reward ratio goes out of whack, people flee the stock market for a better risk/reward ratio. When that happens, the first thing that all companies do is start reducing their labor force. This cuts costs and brings things back into balance. Companies rely on investment dollars to fund operations and growth. Jobs and small businesses are the first thing to suffer, when profits erode. No one cares about heir future unborn grandchildren, when they cannot pay the rent.

It is extremely important to understand risk premiums when making investment decisions. Stocks are only desirable, when their earnings are worth the risk.

We have had a GDP of around 3% for the last decade (ignoring CoVid) and are at historic employment levels. It is very hard for me to comprehend why anyone would want to upset the apple cart on a hope and a prayer. Particularly, when we know that the deck is stacked, and the house is still making the rules.

Are we now assuming that the "financial elite" are altruistic? That they are going to torpedo their own ship for the folks in the life rafts? These are people who believe that if you aren't rich, it is your own fault. And they may not be wrong.

[BlkGS]

Originally Posted by DrVenture

We are going to punish China at the expense of our own economy, so that our grandchildren are better off? Or simply shift trade to other countries that also employ slave labor, without actually addressing the overall trade deficit? That seems to defeat the premise of tariffs.

In the process giving up on capitalism, free trade and consumerism? And going after the "financial elite". That sounds very much like textbook communism. As the "financial elites" themselves will be the ones pulling levers and tweaking dials, why would anyone think that they were going to change the balance away from themselves?

The lowering of trade barriers coincided directly with 30 years of economic prosperity. There were winners and there were losers. Overall our economy benefitted greatly. It is also well understood that a healthy global economy is beneficial to the U.S. And that when China's economy goes badly, so does everyone elses. As our economy, and other Western economies, have always done better than many of our European allies, why would we want to emulate them?

Agreed, you have to address the trade deficit. The tariffs are just the first step. You have to also make it so that the US is the ideal place to invest in production and export from. There are certain markets that we will simply never be able to compete in cost effectively. India for example has a burgeoning auto industry making little shit ox cars that sell for like the equivalent of $8-9k. We will never be able to build and export a car to India and sell it for that little. However that doesn't mean that we should open the door for India to undercut our domestic production.

The real issue is that what's really been growing and showing "good for our economy" is the finance industry. Finance does not produce a product of value, and it's largely an industry out of reach of the average American. On the contrary, the financial industry is largely an industry that makes its money by draining it out of other industries. The profit that the finance sector makes is really money that's siphoned off by surprising labor costs, raising margins on products, or making products that require replacement more frequently.