A Quiet Giant of Investing Weighs in on Trump

Article: A Quiet Giant of Investing Weighs in on Trump by Andrew Ross Sorkin

 

Seth A. Klarman is a financial leader who is even respected by Warren Buffett. Mr. Klarman has lost money in only 3 of the past 34 years.  He runs the Baupost Group, a 30-million dollar fund. He is very bright, and relatively non-partisan, so I thought his financial impressions might interest you:

 

  • Tax cuts are dangerous in the long haul and will drive debt higher. Tax cuts in 2001 magnified income inequality and deficits.
  • Protectionism and trade barriers will likely work against growth.
  • Swelling national debt will undermine growth.
  • When interest rates go up, outstanding government debt will skyrocket.
  • Strained relations with allies and other countries may negatively affect trade relations.
  • All of the above can lead to the end of dollar hegemony.
  • Klarman believes hedge funds are evolving into a failed product.
  • Long-term value investors will have a distinct advantage.

 

So tax cuts, deficits, protectionism, strained relations, trade barriers, and high interest rates may be leading us down a road of financial worry and many challenges.

 

What are your thoughts about what will work or not work in the next years?

 

Joe

 

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