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Trade War: Is it time to fire sale all your stocks?

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  • Mar 30th, 2018 5:35 am
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Nov 4, 2016
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Trade War: Is it time to fire sale all your stocks?

China said they will retaliate tomorrow with their own tariffs. The US tariff against China was on $50 million of goods. The Chinese tariff against US will be on $3 billion of goods.

https://www.rt.com/business/422086-chin ... y-tariffs/

Bank stocks might crush by as much as 2-5% in one day. Energy stocks maybe even more.

Amazon might be hit harder by a trade war than anyone else. Pretty much all Amazon do is trade back and forth with China.

Worst part is this might be the start of a full blown bear market. If this trade war escalates we might be looking at years of bear until the next president (hopefully not Trump) take over.

How close are you to fire selling all your stocks and sit on cash?

How close are you to building your own nuclear bunker in case of World War 3? XD

Note: I am not suggesting or hinting one way or another. I am just another very scared investor.
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67 replies
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Dec 14, 2010
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As a trader, I'm follow the rules for my strategies, regardless of what Trump did or might do. As an investor, I'm adding more, as there are always opportunities to invest.

Corporate guidance has been strong and companies continue to beat estimates. Higher earnings drive higher prices. Solid companies perform well in any market conditions, and it's the executive's job to figure out how to continue to grow earnings in any environment. Ours is just to allocate capital.

Are you invested in the market? Or in individual businesses that are part of the market? My own personal approach is to not worry about things like a major market correction. Instead, I try to focus on the business I am investing in, what I believe its current intrinsic value is, and most importantly what I expect future intrinsic value to become.

Even in a generally overvalued market, there are reasonable valuations to be found. We can't control price fluctuations, but we can control the quality of the companies we purchase. The higher the quality, the more confident I am that the company will bounce back on any price drops.

If you are a trader, you need an entry and exit strategy regardless of news tells you. And if you are an investor, you should be in for the long term. With that, any business public or private, derives its value based on the underlying performance that the business generates. These value drivers include, but are not limited to, operating results such as earnings, cash flows, sales (revenues) and dividends.

Common sense tells us that the true value of a large multinational business, or any business for that matter, cannot possibly change as quickly or as much as daily price quotations would indicate. This mindset helps to welcome any market correction as an opportunity to add more. But don't wait for it, bull markets die hard and no one rings a bell when it reaches the top and is about to crash.

Stock prices in the short run can be driven by strong emotions such as fear and greed. The intrinsic value of a business is driven by fundamentals and can be calculated within a reasonable degree of certainty. Once this calculation is made, sound investing decisions can be made and implemented.

Successful investing is about managing risk, nor avoiding it. Trading and investing it comes with volatility and large drawdown, that's why equities provide higher returns. Discipline and temperament are paramount to stay on course. Define the strategy that you want to pursue and understand the risks - tariff wars is not one of them, and the biggest risk is usually how an investor reacts to news like this.

Remember what you want to own and why you want to own. It should give you the confidence to continue to trade / invest.

Good luck!


Rod
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Deal Fanatic
Mar 24, 2008
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CCHIPSS wrote: China said they will retaliate tomorrow with their own tariffs. The US tariff against China was on $50 million of goods. The Chinese tariff against US will be on $3 billion of goods.

https://www.rt.com/business/422086-chin ... y-tariffs/

Bank stocks might crush by as much as 2-5% in one day. Energy stocks maybe even more.

Amazon might be hit harder by a trade war than anyone else. Pretty much all Amazon do is trade back and forth with China.

Worst part is this might be the start of a full blown bear market. If this trade war escalates we might be looking at years of bear until the next president (hopefully not Trump) take over.

How close are you to fire selling all your stocks and sit on cash?

How close are you to building your own nuclear bunker in case of World War 3? XD

Note: I am not suggesting or hinting one way or another. I am just another very scared investor.
Are you a long term investor? If so, this will probably be just be a blip in the charts. Time to buy more if you have the funds. :lol:
Illegitimi non carborundum
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Feb 5, 2017
831 posts
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waiting for a 10% drop to sell 100K of bonds and buy more equities
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Nov 9, 2013
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Edmonton, AB
Keep calm and invest on.

Of note if there's a fire sale on stocks, especially Canadian Banks, I'll be buying.
Keep calm and go long
Deal Addict
May 17, 2012
2363 posts
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ontario
the trade war is between us & china

would tarriffs on US energy be good news for CDN energy (if we could ever get it to them effectively)?
Deal Addict
Dec 23, 2015
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Dumb money keeps buying the dips, ensuring a profitable sell off for the smart money. The narrative of the day is irrelevant.
Deal Addict
Oct 21, 2014
1479 posts
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Burlington, ON
CCHIPSS wrote: https://www.rt.com/business/422086-chin ... y-tariffs/

Bank stocks might crush by as much as 2-5% in one day. Energy stocks maybe even more.
Sounds like you're dealing with some fear. Why are you afraid? There are always problems in the world, and they always resolve in their course.

To your points I'm not selling a thing. Not that concerned because the companies that I own provide products that people know and love, and people are going to buy them no matter what is the crisis of the day. Did you notice how these sanctions came out just around the time of Trump's marital and Russia probe? The cynic in me believes that Trump is causing chaos to provide a distraction for his personal and legal problems.

I'd also be wary of sourcing information from the Russia Times, if you find it's fueling your fears I'd suggest avoiding it doubly so.
Deal Addict
Dec 23, 2015
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Image
Gungnir wrote: I'd also be wary of sourcing information from the Russia Times, if you find it's fueling your fears I'd suggest avoiding it doubly so.
You may have a point there but your warning should extend to a much broader array of "news" outlets including the big 6 US media conglomerates .
Deal Addict
Oct 21, 2014
1479 posts
1830 upvotes
Burlington, ON
6060842 wrote: Image

You may have a point there but your warning should extend to a much broader array of "news" outlets including the big 6 US media conglomerates .
I couldn't agree more. Focus on your holdings and why you bought them, their earnings and don't worry about our current "stormy" political environment. It will clear up, it always does
Deal Addict
Dec 23, 2015
1266 posts
1705 upvotes
Gungnir wrote: I couldn't agree more. Focus on your holdings and why you bought them, their earnings and don't worry about our current "stormy" political environment. It will clear up, it always does
It always does until it doesn't ... the 2nd world war "cured" the economic malaise of the 30's. Economic wars have a way of turning into full blown military conflicts.
Banned
Feb 23, 2009
1670 posts
1495 upvotes
Oshawa
There is no trade war.
Fake News.
Deal Addict
Oct 21, 2014
1479 posts
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Burlington, ON
6060842 wrote: It always does until it doesn't ... the 2nd world war "cured" the economic malaise of the 30's. Economic wars have a way of turning into full blown military conflicts.
Well it did though, we live in the greatest golden age that humanity has ever known.

I doubt war will happen, and if a large scale conflict does kick off your wealth is meaningless. As for the economic malaise, the dow was like 140 in 1939 and it's a bit less than 24,000 now, so if you were to have held on for that long, you did ok. Not great, only 171x your money, but ok.

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