Tag Archives: Trump

How to invest and shop during Trump idiocracy

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Theatrical release poster for the film, Idiocracy. via Wikipedia.

By Mark Seed, myownadvisor

Special to Financial Independence Hub

A few months ago I wrote:

“Yes, interesting times may call for interesting portfolio changes! Or not. :)”

Well, here we are.

Regardless about how you feel about the current U.S. Administration, I would think most people would agree that this U.S. President feels very emboldened right now. With no future term to go: this is his last shot at taking shots at pretty much anything and everyone he wants without too many consequences near-term. At least it seems that way …

Since writing this post below from December I thought I would update such a post about any recent portfolio changes and beyond that, how our shopping habits have shifted (if at all) in recent months.

How to invest and shop during Trump idiocracy

I put the term “idiocracy” in the post title since it’s very much how I feel right now.

It’s like watching the Ferris Bueller movie scene: on tariffs.

History repeats.

Now that tariffs are in place and we’re now in a (trade) war between Canadian and U.S. businesses, consumers and workers (sadly), I’m expecting these tariffs will roil stock markets for months or years to come.

I have.

This is how I intend to invest and shop during some prolonged Trump idiocracy.

Approach #1 – What investments can withstand stagflation?

New tariffs are likely, in my opinion, to trigger a sustained period of low economic growth and even higher inflation: which will impact everyone.

At the most basic level, inflation means a rise in the general level of prices of goods and/or services over a period of time. When inflation occurs, each unit of currency buys fewer goods and services. Inflation results in a loss in the value of money and purchasing power. We will all be impacted by this.

Stagflation is essentially a combination of stagnant economic growth, high unemployment, and high inflation. When you think about it …. this combination probably shouldn’t exist: prices shouldn’t go up when people have less or no money to spend. This could be a place where things are trending…

Farmland might perform well during stagflation but we don’t own any.

Instead, I own some “defensive stocks” including some in key economic sectors like consumer staples, healthcare and utilities in my low-cost ETFs that should be able to weather a prolonged disruption. I also consider a few selected stocks we own as defensive plays: waste management companies. At the time of this post, both Waste Management (WM) and Waste Connections (WCN) we own have held up very well and provided stellar returns over the last 5+ years that I’ve owned them.

  • WM is up almost 100% in the last 5-years.
  • WCN is up over 100% in the last 5-years.

We’ll see what the future brings and my low-cost ETFs are a great diversifier: regardless.

Approach #2 – Staying global while keeping cash

Beyend certain sectors, investors should always consider holding a well-diversified stock portfolio across different sectors and different economic regions to reduce the long-term reliance on industries directly affected by tariffs.

While I have enjoyed a nice tech-kicker return from owning low-cost ETF QQQ for approaching 10 years now, and I will continue to hold some QQQ in my portfolio, I could see technology stocks tanking near-term. To help offset that, I own some XAW ETF for geographical diversification beyond the U.S. stock market. Thankfully. 

Times of market stress are however times to buy stocks and equity ETFs.

Near-term and long-term investing creates buying opportunities for disciplined investors. A well-structured, diversified global mix of stocks including those beyond the U.S. could provide some decent defence against a very toxic, unpredictable economic and political agenda.

For new and established readers on this site, you might be aware I’ve mentioned that our investing approach could be considered a “hybrid approach” – a structure that was established about 15 years ago as follows:

  1. We invest in a mix of Canadian stocks in our taxable account: to deliver income and some growth, and
  2. Beyond the taxable account, we own a bunch of low-cost ETFs like QQQ and XAW inside our registered accounts: inside our RRSPs, TFSAs and my LIRA for extra diversification.

I like the hybrid approach, the process and the results to date.

At the time of this post, I just don’t see how I should be making any significant changes to our equity portfolio.

Beyond our portfolio of stocks and equity ETFs we keep cash/cash equivalents.

Cash savings remains a good hedge for a very uncertain near-term future. We have a mix of Interest Savings Accounts (ISAs) / High Interest Savings Accounts (HISAs), along with Money Market Funds (MMFs) in particular in our registered accounts. Generally, plain-vanilla savings accounts offer very low interest rates. So, if you want to earn more on your savings deposits (rather than simply using your savings account) then consider an ISA or HISA.

The greatest appeal of ISAs and HISAs for taxable savings IMO is liquidity, while earning interest, and member financial institutions of Canada Deposit Insurance Corporation (CDIC) insure savings of up to $100,000. It’s good business for banks and institutions as well since money deposited generates interest by allowing the bank to access those funds for loans to others. There are usually no fees for these accounts and while interest rates have come down in recent months, ISA and HISA interest rates are consistently north of 2% at the time of this post.

I believe some form of savings account / ISA / HISA remains the cornerstone of everyone’s personal finance portfolio since 1. your money is saved for future expenses or ready for emergencies, 2. it is safe/low risk, 3. it is liquid, and 4. you still earn returns.

Let your equities do as they wish after that.

Approach #3 – Shop local, buy local, and avoid U.S. travel

We are fortunate to live in an area in Ottawa where we can shop local and buy from local farmers. We will continue to do that.

For those that want to shop more in Canada and buy more Canadian goods visit here:

We’ve been fortunate to save up some money in our “sunshine fund” as I call it for some future travel. I/we have no near-term plans to spend our money in the U.S.

I’ve been fortunate to visit many, many U.S. States over the years but given this recent trade war initiated by this current U.S. Administration I hardly have any desire to spend my money in a country whereby that government talks about annexing us.

It’s that simple for us.

I encourage other Canadians who can and do travel, to consider the same – avoiding the U.S. – not because of its citizens but the U.S. Administration decisions. Continue Reading…

Tariff Tantrums: Protecting your Portfolio with Defence and Income

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Image via Harvest ETFs/Shutterstock

By Ambrose O’Callaghan, Harvest ETFs

(Sponsor Blog)

In his 2024 re-election campaign, U.S. President Donald Trump vowed to pursue an aggressive trade policy that aimed to reduce or altogether eliminate what he viewed as unacceptable deficits between adversaries and allies alike. Following his January inauguration, President Trump has put Canada and Mexico into his crosshairs. Tariffs continue to be one of his favourite tools, if his rhetoric is any indication.

A tariff is a tax that is imposed by a country on the goods imported from another country. It is typically collected by a country’s customs authority. Some economists have argued that this results in a larger burden being paid by consumers, as companies will pass on tariff costs to the consumer.

In this piece, we will look at how ongoing trade tensions could impact world economies and markets. After that, we will zero in on ETFs that can potentially provide protection against the current bout of volatility.

Trade policy volatility and Canada

Last month, we looked at the impact the new GOP administration could have on the industrials space. That piece explored the trade policy volatility that existed in the first Trump administration.

Baker, Bloom & Davis
US Categorical Economic Policy Uncertainty Index – Trade Policy

Source: Baker, Bloom & Davis. Bloomberg, Harvest ETFs, as of January 21, 2025.

On Monday, February 3, 2025, U.S. and global markets suffered sharp pullbacks in the morning hours. However, markets recovered after the Trump administration announced that tariffs on Mexico and Canada would be delayed for 30 days.

Canada finds itself at a crossroads as it contends with unprecedented pressure from a long-time ally, political uncertainty on the domestic front, and muted and decelerating economic data. The Bank of Canada must weigh these pressures as it determines how much it can slash interest rates to bolster economic activity..

That aside, Canada is home to many great companies with oligopolistic qualities. We detailed their strengths in a piece in October 2024. The Harvest Canadian Equity Leaders Income ETF (HLIF:TSX) invests in 30 of Canada’s most powerful and largest companies for their traits and growth potential. It overlays an active covered call strategy, which seeks to generate high monthly cash distributions.

Combat trade volatility with defence and diversification

Defensive sectors contain businesses that are stable, possess key barriers to entry, and are relatively immune to economic fluctuations.

Healthcare falls in this defensive category and is unique in its diversity. It includes companies that manufacture medical devices and equipment, as well as those that are involved in the making of diagnostic tools and lab equipment, companies involved in the ownership of doctors’ networks, as well as facilities and companies in the Managed Care segment.

The Harvest Healthcare Leaders Income ETF (HHL:TSX) is an equally weighted portfolio of 20 large-cap global healthcare companies. HHL aims to generate an attractive monthly distribution through an active covered call writing strategy. This ETF has paid out over $500 million in total monthly distributions to unit holders since its inception.

Utilities is a space that is often targeted by investors who are looking to shore up a defensive position in their portfolios. Companies in the utilities space possess enormous scale, significant barriers to entry, and dominance in their respective markets. The Harvest Equal Weight Global Utilities ETF (HUTL:TSX) offers access to a globally diversified portfolio of utilities equities. That global diversification offers benefits like reducing interest rate and natural disaster risk with exposure to different countries and regions. Continue Reading…

Tariffs Troubles? Remember this Timeless Tip: “It’s already priced in.”

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Image: Canva Custom Creation/Lowrie Financial

By Steve Lowrie, CFA

Special to Financial Independence Hub

A key concern many investors have at the moment is the impact of Trump’s tariffs on goods produced outside the U.S. on the markets. I’m hearing from those wondering if they should do something to protect their wealth; their primary question is: What should I do with my investments?

My answer (as it usually is when investors are concerned about the geopolitical impact on the markets): stick with the plan because, by the time the news is public and you become concerned, the markets have already accounted for it/priced it in, so any reaction you take is too late.

A useful historical reference on tariffs is President Trump’s first term. Starting in 2017, his administration targeted China, implementing tariffs on a broad range of products by 2018. The following years saw ongoing trade negotiations that led to an agreement, though many tariffs remained. Despite the uncertainty, both U.S. and Chinese markets outperformed the MSCI World ex USA Index over Trump’s four-year term. Have a look at the data from 2017 to 2020, as Dimensional compares China MSCI Index to US S&P 500 Index to MSCI World ex USA Index.

Markets are forward-looking, meaning that the potential economic effects of tariffs are likely already factored into current prices. As a result, when these anticipated changes materialize, their impact on markets may be limited.

Understanding how Market Pricing Works

Let’s talk about the price of stocks.

It stands to reason: To make money in the market, you need to sell your holdings for more than you paid. Of course, we’re all familiar with good old “buy low, sell high.” But despite its simplicity, many investors fall short. Instead, they end up doing just the opposite, or at least leaving returns on the table that could have been theirs to keep.

You can defend against these human foibles by understanding how stock pricing works and using that knowledge to your advantage.

Good News, Bad News, and Market Views

How do you know when a stock or stock fund is priced for buying or selling?

The short answer is, we don’t.

And yet, many investors still let current events dominate their decisions. They sell when they fear bad news means prices are going to fall. Or they buy when good news breaks. They invest in funds that do the same.

While this may seem logical, there’s a problem with it: You’re betting you or your fund manager can place winning trades before markets have already priced in the news.

To be blunt, that’s a losing bet.

You’re betting that you know more about what the price should be at any given point than what the formidable force of the market has already decided. Every so often, you might be right. But the preponderance of the evidence suggests any “wins” are more a matter of luck than skill.

Me and You against the World

Whenever you try to buy low or sell high, who is the force on the other side of the trading table?

It’s the market.

The market includes millions of individuals, institutions, banks, and brokerages trading hundreds of billions of dollars every moment of every day. It includes highly paid analysts continuously watching every move the markets make. It includes AI-driven engines seeking to get their trades in nanoseconds ahead of everyone else.

And you think you can beat that?

We believe it’s far more reasonable to assume, by the time you’ve heard the news, the collective market has too, and has already priced it in.

  • News of a recession, under way or avoided? It’s already priced in.
  • Inflation on the rise, or abating? It’s already priced in.
  • A company suffers a calamity or makes a major breakthrough? It’s already priced in.
  • The government passes critical legislation that helps or hinders global trading? It’s…

And so on. Here’s your best assumption:

If it’s public knowledge, it’s already priced in. (And if it’s insider information, it’s illegal to trade on it.)

What we don’t yet Know

As soon as an event is priced in, several things make it difficult to profitably trade on the news:

You’re Buying High, Selling Low: If you trade on news after it’s been priced in, odds are you’ll buy at a higher price (after good news) or sell at a lower price (based on bad news). Continue Reading…

A few thoughts on Trump’s victory and investing under Trump 2.0

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Deposit Photos

By now, there’s not much I can add to the ubiquitous media coverage of Donald Trump’s shocking imminent return to power.

Since our “beat” here is Financial Independence I’ll spin this that way. A few weeks back we looked at a Franklin Templeton webinar on the investment implications of either a Harris or a Trump victory. See this blog I wrote on October 23rd, headlined Don’t mix politics and investing but financial community thinks a Trump victory more positive for stocks.

You can say that again. As I write this in a daze mid Wednesday, the Dow Jones Industrial Average was up 1300 points or 3%. Bond prices, on the other hand, are going in the opposite direction.

Franklin Templeton also issued a press backgrounder conveying the view of various money managers. For obvious reasons, below I have cherrypicked the ones that address a Trump victory.

Before we get to that, I’ll point to a Globe & Mail column by Andrew Coyne published Wednesday (Nov 6th), in the aftermath of the election result. The headline tells the tale: Trump’s election is a crisis like no other, not only for the U.S. but the world. (likely under a paywall.) The world yes, but especially Canada. If you can access the column also check the hundreds of reader comments, which offer many and varied takes on the implications of Trump 2.0 on the Canadian economy and politics.

Personally, during the run-up to the election I did not tinker with our family’s portfolio to take advantage of any alleged “Trump trade” or “Kamala stocks.” Those who noted this site’s 10th anniversary the day before the election will probably feel this is a broken record, but I’ve found that a globally diversified balanced portfolio with exposure to all major asset classes is adequate preparation for whatever the investment world may have in store for us.

Asset Allocation ETFs play offence and defence

Let the money managers at places like Franklin Templeton, Vanguard Group, BMO ETFs, Blackrock or Robo advisors decide the relative proportions. Those who engage financial advisors or portfolio managers may want to check in for a portfolio update. For average DIY investors, those Asset Allocation ETFs often referred to in this site should allow investors to sleep at night no matter what horrors await us in January and beyond. In other words, the stocks component of these AA ETFs let you play offence and benefit from the rising of stocks as animal spirits take over investors. But a healthy fixed-income allocation also allows you to play defence in case things get too ebullient. As the old saying goes, you want to “Eat well and sleep well.”

Continue Reading…

Should I change my investments during an election?

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LowrieFinancial.com
By Steve Lowrie, CFA
Special to the Financial Independence Hub
Back during the Clinton/Trump U.S. presidential election four years ago, I ended up fielding a lot of questions from investors of all political bents. Many investors wondered whether they should adjust their portfolio in response to the change of the guards. At the time, I had this to say: 
  • Post pubBack during the Clinton/Trump U.S. presidential election four years ago, I ended up fielding a lot of questions from investors of all political bents. Many investors wondered whether they should adjust their portfolio in response to the change of the guards. At the time, I had this to say: 

“If you want to skip reading my more detailed explanation, the answer is: No. Even when political news is strongly felt, there will likely never be a good time to shift your investments — neither in reaction nor as a defence. First, no matter how certain one or another outcome may seem, how the market is going to respond to the news remains essentially unknown. Second, by the time you’ve heard the news, it’s already priced into the market anyway.”

Fast-forward to 2020. To say the least, a few things have changed!  But my advice remains the same: From one election to the next, other factors have exhibited a far greater impact on investment returns than which person or party holds the U.S. presidency. Whether leadership is more or less conservative, largely efficient markets have usually figured out a way to shift and grow, either way.

As we can see in this interactive chart from Dimensional Fund Advisors, these results are well-documented. They also make a lot of sense, given something called “stage-one and stage-two thinking.”

Thinking in Stages

Stage-one and stage-two thinking are terms popularized by economist Thomas Sowell in his book, “Applied Economics: Thinking Beyond Stage One.” Basically, before acting on an event’s initial (stage one) anticipated results, it’s best to engage in stage-two thinking, by first asking a very simple question:

“And then what will happen?”

By asking this question again and again, you can more objectively consider what Sowell refers to as the “long-run repercussions to decisions and policies.”

Who will next occupy the various seats of power around the globe, and what might the results be? Stage-two thinking helps us see past the usual proliferation of stage-one predictions that call for anything from financial ruin to unprecedented prosperity.

As financial author Larry Swedroe describes in a US News & World Report interview, “Stage one thinking occurs when something bad happens, you catastrophize and assume things will continue to get worse … Stage two thinking can help you move beyond catastrophizing … [so you can] consider why everything may not be as bad as it seems. Think about previous similar circumstances to disprove your catastrophic fears.”

Timeles lessons in terminal uncertainty

In the 2020 U.S. presidential race, we’re seeing prime examples of both dire and exuberant financial forecasts, presumably premised on who wins the election. The truth is, nobody has a clue what all the combined market-moving forces have in store for us in the near term, because nobody can know the answer to Sowell’s convoluted market-moving question: And then what will happen? Continue Reading…