SKEPTIC’S GUIDE TO INVESTING
Straight Talk for All, Nonsense for None
About - Our podcast looks to help improve investing IQ. We share 15-30 minutes on finance, market and investment ideas. We bring experience and empathy to the complex process of financial wellness. Every journey is unique, so we look for ways our insights can help listeners. Also, we want to have fun😎
Your Hosts - Meet Steve Davenport, CFA and Clem Miller, CFA as they discus the latest in news, markets and investments. They each bring over 25 years in the investment industry to their discussions. Steve brings a domestic stock and quantitative emphasis, Clem has a more fundamental and international perspective. They hope to bring experience, honesty and humility to these podcasts. There are a lot of acronyms and financial terms which confuse more than they help. There are many entertainers versus analysts promoting get rich quick ideas. Let’s cut through the nonsense with straight talk!
Disclaimer - These podcasts are not intended as investment advice. Individuals please consult your own investment, tax and legal advisors. They provide these insights for educational purposes only.
SKEPTIC’S GUIDE TO INVESTING
Navigating Market Reactions to Political Change
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Surprised by the recent election results? You're not alone. Despite widespread economic discontent, Trump's resounding victory over Kamala Harris left many, including us, scratching our heads. Join Clem Miller and me, Steve Davenport, as we unpack the implications of this political shift and explore how the economy, especially inflation, played a pivotal role in shaping voter sentiment. We dive into the cyclical nature of political power and discuss the public's lofty expectations for falling prices, posing significant challenges for Trump's administration. We'll also look into how key figures like Elon Musk could influence the effectiveness of Trump's governance and what this means for investors navigating these turbulent market reactions.
With political turbulence on the horizon, we analyze potential resistance efforts and the role of checks and balances in maintaining a stable government. Surprising voter demographics, particularly among white men and women, point to a complex tapestry of issues ranging from economics to trust in government, and we explore how Democratic states might push back against federal policies. Our conversation is more than just analysis; it's about preparing you for the future. We conclude with our commitment to enhancing audience engagement, inviting you to suggest interviewees and topics that could sharpen your investment strategies. Your insights are valuable, and we can't wait to hear from you!
Straight Talk for All - Nonsense for None
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Well, here we are after the election and the world has not become a lot clearer. This is Steve Davenport for Skeptic's Guide to Investing, and today I'm here with Clem Miller and we're both a little bit flummoxed and I don't know if you know what flummoxed is, but it's kind of confused, kind of surprised, kind of, you know, trying to figure out where we go from here. So, clem, what was your biggest surprise in this election in terms of how people voted or how things unfolded in this country?
Clem Miller:Well, I was totally surprised by the extent to which trump won this election. So I think that you know, I would not have been surprised had it been a narrow victory, uh, but I was surprised by just how much Trump was able to win over Kamala Harris. So that would be my biggest surprise.
Steve Davenport:Yes, I mean I think that's one thing that I was happy about, because I wanted it to be clear.
Steve Davenport:I didn't want another election to have all this rhetoric around it that said, oh, this might have been corruption, this might have been, and have everybody just not really validate or understand or feel the result.
Steve Davenport:I'm not glad, necessarily, of Trump's victory, but I am glad that it was clear one way or the other.
Steve Davenport:The item I guess I keep going back to is over 70% saying they were not happy about the way the economy was going. And to me it's not that people aren't happy, it's that they believe that Trump will do a better job in the future to try to rectify it. That's the part that if you're not happy about the economy and you pick and I think it's as simple and you tell me if I'm wrong as the guys who were in power didn't do a good job with inflation, I'm going to go back to the other guy and see if it's, right. I think that when you look at Biden getting in, Biden got in because there was just so much outrage about Trump and all the rhetoric around how he handled COVID. And so when negativity is the reason that people vote for you, you've got to worry a little bit that you might be the victim of negativity later on, right?
Clem Miller:Yes, I think a couple of things there. First of all, history moves in cycles, right, and so you're going to have a democratic swing and then you're going to have a Democratic swing, and then you're going to have problems with what's going on with the Democrats, and then there'll be a Republican swing and then it'll swing back to the Democrats. So you have these, these swings in politics, yeah. So that's one thing, but four years is a pretty quick swing. Yeah, it is. Four years is a pretty quick swing, yes, it is.
Clem Miller:But the other thing that's important is you mentioned the economy. Inflation was clearly the biggest issue. But here's the thing Inflation, that is, the rate of change of prices, has been going down. But you know, that's something that you know. We in the in the economics, investment, business world understand that prices have, price changes have been going down.
Clem Miller:But what people out in the hinterland expect, people in Ohio and Nebraska and Alabama you know what they saw were prices going up, and what they're expecting from their new president is that prices will go down, that he will bring prices down. And you and I know, and many of our listeners know that, while an individual good might have its price go down, that overall prices are sticky on the downside and they won't go down. You know the price levels go up. They may stay the same or they may go up. The only time when they temporarily go down is in a serious recession situation. And you know, I don't think I don't think Trump wants to have that, so nobody wants to have that. But I just don't think that he will be able to bring down prices in true or a quarter come true. They're still going to raise prices on imported goods. Inflation could reemerge, prices could rise higher and frustrate this constituency who clearly thinks he'll be able to bring down prices.
Steve Davenport:Right. Well, I mean, first I'd like to go back to something we said offline that I'd like to make here, which is, I think, that we still don't know what this government's going to be until we get the House vote finalized. If the House goes, you know, democratic, I think this administration in this four years, you know, I don't know how you're going to be able to fully evaluate and say hey, you know, they were able to get X, Y and Z. Maybe it's a more organized Trump administration than the first time. I got to think it probably is because it was kind of chaotic and when Siles and some of the people came in and started running this campaign you know, at the beginning of 2021, I think they brought some rationality to Trump. And if it's a more rational Trump and he controls the House, I think they're more successful. It's a more rational Trump and he controls the House, I think they're more successful.
Steve Davenport:If they don't control the House and he has people in his administration, aka Musk and others, who really have big personalities and want to run things the way they see fit, I think we're going to see more upheaval.
Steve Davenport:So I believe, three days out of the election, my thing is let's just wait and see, because I think there's a lot of things to be evolved over the next three to six months that will tell us what the next four years will hold, and I think that jumping to conclusions, could be the wrong way to go in terms of how we invest around this administration. Right now. I'm saying I love the fact that the market is up, I can trim some positions and, be positioned with some cash and some bonds, and my belief is that rates might come down one more cut, but I think we're not going to see the big decline in rates because I think that inflation is going to come back more because Trump is more inflationary. What do you feel about inflation?
Clem Miller:Well, as I was saying before, if even some small part of these tariffs come through, it's going to increase, it's going to increase inflation because the prices of imported goods will go up. So I think we're headed back towards an inflationary period and to that, I think it's interesting that Jerome Powell decided yesterday. Well, he was asked at his press conference after the raid announcement whether he would resign if Trump asked him to, and he said no. And he said what about you know? Can he demote you or any of the Board of Governors? And he said no.
Clem Miller:So he's going to stand up to Trump, and so that's going to be one of the things that's going to potentially create some havoc in the new year is that I'm not, as you know, I'm not as sanguine about all of this as you are. I think. I think we're going to have quite a bit of I don't know, chaos is too strong a word, but we're going to have a lot of volatility around some of the things that Trump is going to intend to do and the efforts let's call it by the resistance right to what he's trying to do. So, you know, you mentioned one of them, which is well, what's going to happen with the House? And the House could serve as a check. You know, if it's a Democratic House, it could serve as a check on what, what Trump intends to do. Well, a lot of people think, well, a unified government's the best. A lot of people think, no, a unified government's not the best, it's better to have checks and balances. I fall into that category of it's better to have checks and balances.
Steve Davenport:I am in favor of gridlock. I truly believe the guys at Strategas and other places that have brought this concept up. There's a lot of reasons to like gridlock. If you think the government is going to add very little to the situation, then having them be blockaded by eachother is nice . If you believe government is doing great things and to harm the implementation of government is a catastrophic event, I'm not one of those people. I think the government has trouble allocating capital and people do it a little better. So therefore, I would believe that gridlock would be good. My theory is saying when I'm a little bit and this is the last time I'll talk about this, but I'm just a little bit surprised by the white vote. Were you surprised that over 70 percent of women and over 74 percent of men voted for trump? White, white men and white women?
Clem Miller:Very surprised. I mean as well, not so much surprised about men, necessarily, but I think it's very surprising that women voted in those numbers for Trump. I'm very surprised about that.
Steve Davenport:Yeah, I just I thought that, I thought that there would be. And then I say, ok, there's two issues, there's the economics and then there's the race. And I felt like if all of those people who are white or Caucasian felt the need to vote for Trump, that really sends a bad message. And they also recruited a higher percentage of Latinos. That sends a message in the future to the Democratic Party. That boy, you guys must have really done something to upset this group, because that's a pretty strong message to send, isn't it that? Hey, I don't trust the way you guys are in it. And is it trust related to the way are in it? Is it trust related to the way they handle Biden? Is it trust related to the way they handle inflation? Is it trust related to a bigger issue about, you know, more government versus less government?
Clem Miller:I don't think it's more government versus less government. I think that's a concern for, for those who have to pay a lot of taxes, right that's. I don't think that your average person on the street, your average voter, is concerned about too much government. I think that you know there's a lot of obviously racism in society, continuing racism. I think that's a part of it. You know, some friends of mine who are women say women don't support women. Yeah, I've heard that statement and that's, you know, that's kind of unfortunate. And you know, I think that there are a lot of these kind of weird tangential social issues that you know the left wing of the Democrats are involved in or have championed, and I think that that Trump's people have been able to to exploit those and say look, you know they're going off the Democrats, liberal Democrats, are going off the deep end, and and you know we're the people who are, who are the paragons of, of logic. So I think he was able to to exploit that.
Clem Miller:But I wanted to come back a little bit to the checks and balances and you know we mentioned the House, but it's not just in the. I wanted to mention that also. You know the Senate, you know there's the, the effective power of the filibuster, or the threat of filibuster, which essentially means that you know, if the Democrats want to exercise it, you know they can hold that hostage and say, look, you need 60 votes in order to get legislation passed. So we can't forget about. You know, even as the Republicans get maybe 53 votes in the Senate, 53 seats, you know they're going to need 60 if the Democrats decide that they're going to hold up some legislation.
Clem Miller:And then there are, you know are some other checks on the system too. One check is that you have a whole bunch of Democratic states who are now thinking about what they can do to implement, you know, sort of a new federalism, so to speak. You know, just like the Republican states would say hey, we're basically sovereign states and we can, we can exercise a lot of authority ourselves. You know, witness Texas, for example, under Biden. I think you're going to see the exact same thing happen with California. In fact, there's already been a special session, called by Gavin Newsom, to try to figure out what they can do to resist what's going on, what will be going on in Washington. So I think that's interesting too.
Steve Davenport:And then the other yeah, I'm thinking about the year coming out here, clem, and one of the things I was thinking about is it would be great to hear from Fraser in New York and Gattuso in New York, because I was a little surprised New York going 55-45 seems unusually close given what I think of the political state in New York, in New York, but I think what New York represents is kind of what the country represents, which is in the city you have a great deal of democratic support. But when you go out into the country in New York and you go north and you go to the more rural areas, it isn't translating. And I think that New York has, you know, I thought, a pretty strong Democratic base and to win 55-45 seems like, you know, that's a pretty harsh rejoinder for the Democratic Party. I thought, new York, I mean, why did Trump do the Madison Square Garden rally? Maybe he you know what I mean Maybe he had felt that there was some support in New York that he hadn't realized before. He wanted to try to take advantage of it.
Steve Davenport:I don't know, but it's amazing to me that he is only, you know, a 5% difference. One way or the other Could have been New York is a tie. That's just outrageous to me, isn't it to you? Yep, what do you think we? So one of the things I've been thinking is I believe that what we've had with interviews has been good for us. Are you up for more interviews in the coming year?
Clem Miller:Absolutely, we should do more interviews. I think that we've had some very, very interesting interviews and I think that obviously continuing to follow the emergence of a new administration, the new administration policies, the appointments, and all of that, all the conflicts and the implications for investors, I think all of that would be very interesting for us to follow as we progress here.
Steve Davenport:The other thing I'd say when we look back at the year I feel it's been a year we're at 54 episodes. We had some great following in the last month and one of the things that I noticed of our episodes is the episodes that are very current, whether it was about CrowdStrike, whether it was about OLP and obesity, or whether it was about what's happening with breakup in Google and the Magnificent Seven regulation. As long as we're more current, I believe our listeners will be more interested. Are you up for being more off the cuff and current?
Clem Miller:Absolutely. I think we can run circles around those folks who you know institutional investors, who have to plan weeks in advance for calls and by the time those calls run around and all the paperwork is prepared and so on, it's all old news and we can be here, you know, within a day or two. Right, and come up with our insights.
Steve Davenport:Okay, so I guess it's agreed. We're going to do more interviews. We'd love to hear from people who want to be on the show, we'd love to hear from people who have suggestions as to what type of people we should interview, and we'd love to have people give us, you know, off-the-cuff, quick ideas on what we should talk about, because we're here to help investors and if investors need insights quicker and more aggressive, then we'll give them insights and education that we think will push them in the right direction towards better results. Are you committed? Absolutely All right. Everybody thanks for getting on, thanks for supporting us, and we really appreciate all of our followers and everything we're doing is for you, and we hope that you reach out to us and send us something in the mailbag so that we can answer the questions whenever we have new episodes. So thank you and have a good day and have a great weekend.
