Trump and your 401k: what to sell and when?

[Benny Profane]

Just chase yield Big Steve...live like a King.

Wrong. Borrow a shitload of money, stiff the contractors, skim millions, hire lawyers who reinvent your personal tax code to zero, hey, maybe even get a nice return, convince the world through TV fictions called Reality that you're successful, watch the money roll back in, still avoid paying taxes, then, live like a King.


Fuck it all up by running for President.

[iceman]

I'm sure he's a Yankees fan.

[abraham]

Somewhat off topic but if there were a way to buy some sort of financial product that bet against the continued valuation of companies like uber and airbnb I would be very interested in that product.

I assume you've read this? It's a few months old and I don't know enough to tell you if it's valid http://qz.com/707947/investors-have-...y-to-short-it/

[Benny Profane]

I'm sure he's a Yankees fan.

Now that you mention it, in all my years, I have never ever seen him at the Stadium or somehow written about pictured around the team and players, which is quite remarkable, considering where he's from and still lives. Mets, neither. He did the football thing, but, I doubt that was out of love for the game. Maybe he was jealous of Steinbrenner? Fucked that one up, big time, too.

[shroom]

You can. Kind of. VXX is short term VIX futures. I am up 25%. Probably sell on Monday.

ah, i just meant as an available option in my employer plan. now my ira is another story.

[4matic]

I bought more Emerging Markets today. Was looking for sell off into election. Dollar might get smacked on Trump win which would buffer a little EM risk. Trump tariffs notwithstanding.

[Benny Profane]

Or Steinbrenner.

[The SnowShow]

All he's going to do is constantly crash the markets.

[Benny Profane]

And if he lives long enough, get prosecuted for shorting the markets he rigged.

[Cono Este]

Yeah, I have to agree that although the markets have been aware of the possibility of a DJT presidency for the last year or so, the working assumption has been that it's not actually going to happen. If it did, then I think the shock would be pretty severe.

I just got off the phone with a Canadian colleague who said they're all watching us with great trepidation. As nervous as I am, I think the international markets are even more so.

Good point. Foreign investors will sell with both fists.

[TahoeJ]

Somewhat off topic but if there were a way to buy some sort of financial product that bet against the continued valuation of companies like uber and airbnb I would be very interested in that product.

If you want to bet against something think bigger. I'd bet against the incredible amount of consumer auto loan and credit debt - it's super lax compared to mortgages and will likely be the cause of the next stock market tumble. Several months ago the US topped 1 trillion in those categories for the first time ever and there's been too much salary stagnation to keep up with it.

There are some funds out there doing that, btw (I've invested in some of them).

[geo039]

Good point. Foreign investors will sell with both fists.

Holding my CHFs with both hands until this is over.

[Sirshredalot]

You guys are assuming that if Trump wins he would actually do what he says he'll do. You seem to forget that he's a (bankrupt) billionaire who isn't going to throw himself and his ilk under a bus. He'd just keep throwing red meat to his voters--by trying to throw Hillary in jail (unsuccessfully) while blaming all he can't get done on the Democrats who will be happy to accept the credit. Or figure this--the hedge against Trump winning is already accounted for in the market. If you're thinking about hedging your bets you're way too late. Or too put it a third way--economic collapse is generally caused by things most people didn't see coming (someone is always predicting doom but even a stopped clock is right twice a day), and we've seen Trump coming for 15 months. Given that concern about Trump as president has kept stocks lower than they might have been and given the odds on Hillary winning if you sell now you're likely selling low.

The most immediate economic bad news if Trump gets elected is that we get a Paul Ryan budget passed and signed into law. Although he hasn't released a budget that's score-able, most attempts to guess at his budget plans enough to score them make it look like that would give us a 5% yoy decline in GDP. That would be a serious enough recession to really hammer pro-cyclical industries, and the fed doesn't have room to fight that big a recession right now. That would be the big, immediate, likely hit.

The more nebulous/more difficult to predict hit is if Trump gets us into a trade war and exports collapse, or the right-wing lunatics attempt to kill the central bank, default on sovereign debt, or god knows whatever other moronic scheme they come up with.

And, no, these events are not currently priced into the securities markets. A big, fat recession next year will pound my company's stock price mercilessly. If we go and spike fixed income yields by flirting with sovereign default at the same time, the Fortune 500 firm that employs me will be circling the toilet in a hurry. I don't have faith that whatever reality tv personality or Fox News opinion writer is Secretary of the Treasury in that scenario will be up to managing that kind of crisis.

[Platinum Pete]

I assume you've read this? It's a few months old and I don't know enough to tell you if it's valid http://qz.com/707947/investors-have-...y-to-short-it/

That is an excellent article, ranging further that just Uber. I have passed this along to a number of folks - thanks for sharing it.

[Benny Profane]

If you want to bet against something think bigger. I'd bet against the incredible amount of consumer auto loan and credit debt - it's super lax compared to mortgages and will likely be the cause of the next stock market tumble. Several months ago the US topped 1 trillion in those categories for the first time ever and there's been too much salary stagnation to keep up with it.

There are some funds out there doing that, btw (I've invested in some of them).

Cars are easily repossessed and resold, and the credit card companies make so much freakin' money on that product at mafia level rates and, with no way for a consumer to discharge in bankruptcy, that business is solid, even if a bunch of people go under. Plus, what brought down the mortgage market was securitization, and so many buying into the returns with little due diligence and trusting corrupt ratings agencies. They are more careful, ten years out.

[TahoeJ]

Well Benny, I know some big players in this industry who would say you don't know what you're talking about. I'm sure as shit going to trust them over a guy who can't unload from a lift chair.

[Benny Profane]

Well, screw them.

[4matic]

The market is due for a correction no matter who is sleeping in the White House. Plan accordingly

With a 15 year return at far less than long term trend and a sideways market for the better part of two years I wouldn't say a decline is overdue based strictly on price and historical return.

[4matic]

Well Benny, I know some big players in this industry who would say you don't know what you're talking about. I'm sure as shit going to trust them over a guy who can't unload from a lift chair.

I agree that growth in consumer loans will slow but autos have an easily retrievable and insured asset that can be liquidated quickly. There will be blood but I'm not sure it flows in the street.

I have read some good analysis to get short junk again. I still have a long position but I think I've overstayed my welcome.

[Benny Profane]

I agree that growth in consumer loans will slow but autos have an easily retrievable and insured asset that can be liquidated quickly. There will be blood but I'm not sure it flows in the street.

Nah, tell him to short. He's listening to the same geniuses who couldn't possibly comprehend how the housing market was bubbled in 2006. Smart people. Thing is, they never seem to lose. Just the people they either scam or give bad advice to.

[TahoeJ]

Nah, tell him to short. He's listening to the same geniuses who couldn't possibly comprehend how the housing market was bubbled in 2006. Smart people. Thing is, they never seem to lose. Just the people they either scam or give bad advice to.

Actually, I'm listening to some people who made a ton of money in 2008 - 2010 (you don't think it was only those featured in The Big Short, do you?). Also, never said the economy would collapse from this like in 2008, just that certain types of stocks / investments would take a hit. 4matic's comment about there being blood but not in the streets is spot on.

[Benny Profane]

Dude, in simpler terms, 2008 and the aftermath proved that people will give up their homes before their cars and credit cards. You gotta drive in today's world, and cash is almost extinct. Rentals are up, home ownership down.

[TahoeJ]

I said auto *and* credit card debt. Americans are carrying a scary amount of non mortgage debt right now and it's not sustainable. I don't care to argue with you Benny, do whatever the hell you want.

[hatchgreenchile]

I'm sure as shit going to trust them over a guy who can't unload from a lift chair.

The "Benny can't load a lift" jab really is quite the trump card !

[dunfree]

Why would anyone pay cash for a car when you've got cheap easy credit available to buy one? Car demands high right now in part because of the crisis- car sales cratered and there simply isn't a big pool of used cars available now and prices are high. There's also a shortage of skilled technicians now to work on cars. Three good, financially prudent, reasons for a consumer to buy a new car. Besides, car loans sunset pretty quick, sure 5.7 years is long historically, it's far shorter than a mortgage.

The bigger risk is car lease residuals. Lease market penetration is high and residuals are high. That leaves someone other than the consumer holding the bag. And it's brand/company specific risk, and whomever bought the paper if they securitized it.

Sure, overall a drag on growth, but not pandemic crash likely.

Credit cards are a different business. There's a reason industry parlance for people who pay off their balance every month was "deadbeats"