November 15, 2017

On Wednesday, the S&P 500 was down 0.6% and Toronto was down 0.2%.

Recent experience notwithstanding, the S&P 500 index does decline sometimes. Warren Buffett suggests that most Americans simply invest in the S&P 500 index and they will do well. But he means will do well over a lifetime of investing. He has said many times that markets can fall in the short term and that he has no ability to predict when or by how much and he very much doubts anyone else has that ability either.

CRH Medical bounced up about 12% today. The company has not yet reported any recent buybacks or insider buying despite the lower share price. It’s possible that insiders are precluded from buying due to their knowledge on non-public information – for example if an acquisition is in the works. Or maybe they simply lack the courage to act on their apparent view that the stock is under valued.

Canadian Western Bank was up 2.2% today.

FedEx was down 2.5% today.

I did end up trimming my Toll Brothers position somewhat today. It remains one of my larger positions. I sold in an RESP account where I had gains of over 80% some of which likely came from the currency change.

AutoCanda was down 2.3%. Statistics Canada reported new vehicle sales for September. sales had risen in the country overall as well as in Alberta. AutoCanada has already reported Q3 which included September so perhaps this report reveals little. But it still shows positive momentum going into October.

I listened to Donald Trump’s speech today about convincing all countries to put pressure (through trade sanctions) on North Korea and about doing Fair trade deals as opposed to just free trade deals. This was a good speech that will definitely play well with his supporters. And even those against Trump will have a hard time arguing against what he said today.

Trump’s views implicitly assume that Americans (or the citizens and businesses of any nation) are basically part of a giant “team”, where America wins or loses as a Nation. That’s an attractive notion but it may not be very true. In reality the people and businesses of a nation compete a lot with each other and do not win or lose as a collective team. Imports from China certainly hurt some businesses and cost some jobs. But those cheap goods also benefit millions of Americans. Economic theory suggests that free trade tends to have more benefits than costs. And there is absolutely no requirement to have balanced trade with each and every nation. Certainly, the overall trade deficit of the U.S. is a problem, but it probably makes no sense to think that there should be a balance with each country – even if that sounds logical.

As for Canada, I think Trump’s stance against NAFTA is a problem and is a risk for Canadian exporters and their employees. It depends how negotiations eventually play out.