We should attend to the warnings in Lawrence Summers’s op-ed in the Washington Post:
The new U.S. president will be operating on a weak political foundation, is unlikely to be able to deliver the results he has promised to key constituencies and seems likely to take dangerous gambles in the international arena. This makes it probable that a cycle of growing disillusion, disappointment and disapproval will set in within a year.
We are conducting an enormous, real-life experiment in the importance of what John Maynard Keynes called “animal spirits”:
Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits—a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.
(from The General Theory of Employment, Interest and Money (1936) pp. 161-162)
Will Trump’s attitude continue to be perceived as “pro-business”? Will the policies of the next four years be materially pro-business? Will those factors result in a persistent improvement in the economy in the U. S.? Will that actually help ordinary people? Will we be able to distinguish between the material effects and the important but irrational psychological effects? Just how important are the latter? We’re about to find out.
The Boorgia Regency will prove to be extremely interesting, in the Chinese sense of interesting.
Trump’s proposed policies are seen as business-friendly by those attempting to be in business. The blow back, though, from those affiliating with ‘he’s illigimate” memes, will constantly be an anchor weighing down future green shoots of job growth, poisoning the well of public optimism. Consequently, improvement will most likely be rigorously measured and touted/criticized by partisan opinion rather than acknowledgement of raw data from accurately derived stats.
I do think ordinary people, impoverished neighborhoods and schools serving those living in them, have real possibilies at hand in the impending administration’s willingness to think out of the box, extricating themselves from old themes, preconceptions, limitations that have ruled our society for too many years.
Maybe that’s why so many people voted for such a confrontational, bohemian type of man who will take office untainted by any prior programming gleaned from goverment experience.
IMO, whatever happens, it will be an interesting, timely experiment of throwing out the manual outlining the important decorum of how to be a “good” goverment bureaucrat,” and substititing in a more pragmatic, common sense guide for governance.
I have never, in 25 years of involvement in the investment business, seen any individual or any sustained successful investment program, driven purely or largely, computer-like, by straight analytics. Sure, most do the analytical groundwork, the DCF’s, market analysis, competitive and regulatory evaluation and manufacturing and technology assessment. That’s standard tool kit stuff.
But when it comes time to put your money, time or career on the line its an intuitive and emotional final assessment, many times driven by a somewhat elusive judgement of “risk” and the players charged with executing the plan. I find that many times rank and file liberals do not get this. Its as if a panel of PhD’s can make the “correct” decisions like a credit scoring machine. That’s laughable. That “risk on” mentality has been missing in recent years.
Only time will tell if a Trump Administration can change the environment. I suspect that, despite absurd claims of inheriting a strong economy, it will find itself having to manage an inevitable downturn first.
That would be my bet.
“I find that many times rank and file liberals do not get this.”
No, actually we get it just fine. We have you guys telling us that you make careful investment decisions based upon the risks that you oh so carefully determine. We know and understand that there is an element of luck, that animal spirits (or whatever) drive a lot of decisions. We know that homo economics does not exist. Now, if only all of you guys would admit to this we would be better off.
As to your question, I would expect that what we will see is that all Trump policies will either benefit his businesses, or at least do them no harm. To the extent that is “pro-business”, businesses will be happy. I do not expect anyone outside the top 5% of earners to be much better off. I expect many to be worse.
Steve
Should Trump exceed all the gloomy, only the rich will prosper under a Trump regime expectations, the social progressives will wilt under their extreme disappointment.
Funny thing, Steve. The harder I work, the more I prepare, the more knowledge I have, the more experience and judgement I gain, the luckier I get.
I wonder, in your personal investments, do you simply close your eyes and throw darts at opportunities? If you hire advisors, is the quality of their dice set your primary diligence?