“Be fearful when others are greedy and greedy when others are fearful.”
I’ve been thinking about Warren Buffett’s advice to investors as I try to figure out how to play the Trump presidency. Like many folks these days, I’m uneasy about the economy and the stock market. As a middle-class retiree, I have modest resources. I’d like to see my safe-and-sane portfolio hold up at least through the estimated 14.4 years I have left on the planet.
Let me break my train of thought here. I got that number via a Social Security life-expectancy calculator. The site made sure I understood that figure reflected the “average number” of years on tap for a man of 71 years and three months. Heck, with my workout routine I could live to be 100 — or die tomorrow. Such unknowns make financial planning rather dicey.
Despite the so-called “Trump bump” in the markets – the S&P 500 is up about 5 percent this year and 13 percent since the election – many financial analysts warn investors to be cautious. The stock market doesn’t like uncertainty, they say, and the direction of this administration is difficult to fathom. The president’s pugnacious style also raises fears of a destabilizing geopolitical event.
As an anti-Trump guy, it would give me satisfaction to make some money at the expense of his abhorrent policies toward immigrants and foreigners. Trump has taken aim at Mexicans and wants to keep them out of this country by building a monstrosity of a wall along our southern border. He also is demanding that Mexico pay for this barrier.
Analysts believe Trump wants a 1,000-mile-long, 40-foot-high concrete wall. This would require 7.1 million cubic meters of concrete, at a cost of about $700 million. The estimated overall construction cost is $15 billion to $25 billion.
Well, here’s an ironic twist: Analysts at Bernstein Research have concluded the biggest winner would be Cemex, which as the name suggests, is Mexican and one of the world’s largest manufacturers of building materials, including cement and ready-mix concrete.
Since it isn’t economically feasible to transport heavy building materials over long distances, Cemex, with production facilities and aggregate plants near the border, has a strong advantage over competitors.
By contrast, my liberal politics would dissuade me from investing in the Geo Group and CoreCivic, two companies that don’t signal their primary business: operating for-profit prisons and immigration detention centers for states and the federal government.
The worse the news for immigrants, the better it has been for these companies, said business columnist Jeff Sommer in Sunday’s New York Times. Since the election, CoreCivic’s stock price has climbed 120 percent, and Geo’s has gained 80 percent.
Investor expectations that the actual business of incarceration and detention will expand under Trump have fueled their levitating share prices, Sommer said.
It will take work to play the Trump presidency and feel good about myself.