As an investor in the stock market, I am disappointed by the tariff for the new definitions imposed by President Trump – 10 % on imports from China and 25 % on imports from Mexico and Canada, including 10 % duty on Canadian energy imports (oil, natural gas, electricity ). If these definitions continue throughout the year without a decision, corporate profits may get 3 % -3 %, which means that a similar decrease in the S&P 500 will not be surprising.
As expected, revenge came quickly. The Prime Minister in Canada, who will soon become Trudeau, has fell 25 % conformity to imports of $ 155 billion from the United States, which targets alcohol and fruits, which may significantly affect the main American exporters.
Meanwhile, the President of Mexico Shinbom rejected Trump’s demands for cooperation in Mexico with criminal organizations and implemented its own residence definitions on American goods. I also suggested that the United States focus on combating local drug trafficking and money laundering rather than blaming Mexico.
We must expect reprisal measures from China soon. At the end of the American -Chinese trade war, many American companies and consumers bear the cost of definitions on Chinese goods through high prices, while some Chinese exporters reduced prices to stay competitive.
This is the likeness of “standing at a classic concert” – if someone stands, the row stands behind him should also stand, leaving someone better. Customs tariff wars tend to follow the same style, so the logical result is a compromise. The question is: How long should the markets bear uncertainty before this happens?
Commercial wars may enhance the housing industry
Everyone knows that the customs tariff hurts the global economy, and for this reason it is likely that Trump is a rational negotiation of a compromise. However, with a new tariff for European goods also on the table, it is not clear how quickly world leaders reach an agreement before consumer confidence takes great success.
Despite the disappointment in the market, as a real estate investor, I see bullishly: commercial wars can nourish a residential boom.
Initially, the proceeds of the cabinet may rise due to the short -term inflationary pressure on the imported goods. But in the medium term, with the escalation of commercial tensions, the capital should flow from the most dangerous assets such as arrows to treasury bonds, which leads to low returns. If fears of global slowdown intensify, mortgage rates may decrease significantly, which improves the ability to withstand costs and proves the demand for housing.
When the ability to withstand housing costs increases, it also does real estate transactions, re -display projects, buying furniture, landscape functions, and mortgage assets. The housing industry is a major driver for the American economy, usually 15 % to 18 % of GDP. With a lack of current housing and years of pent -up demand, low rates of rates can reshape the bid wars throughout the country.
Real estate as “Bonds Plus” investment
I was never great on bonds (about 2 % of my wealthy net) because I am the best high -risk investments and the highest bonus. I see real estate as an alternative, as it provides possible estimate, increased rent, and tax benefits. Over the past 22 years, my real estate property has surpassed the treasury bonds and the total bond index, and I expect it to continue.
Of course, having material real estate is not negative. At the end of last week alone, I spent three hours in my old home drawing after the tenants came out. Next: Replacing plaster, washing energy, touching on the deck, and landscapes in the front yard. Although I enjoy providing a great product, maintenance work takes time away from other efforts.
As I am old, I find myself turning naturally towards more real estate investments via the Internet and away from the ownership of material property. The attractiveness of a simpler and less maintenance life grows, such as low mortgage rates.
Benefit from selling the stock market
During his previous term, former President Donald Trump began major commercial conflicts, especially with China, starting in July 2018. Tensions in market fluctuations caused before they culminated in the trade deal in the first stage in January 2020, which reduced some conflicts.
On July 18, 2018, S&P 500 2,800 before selling it to 2,485 by December 18, 2018 – a 11 % decrease. However, by January 2020, the market recovered to 3300, made an impressive profit of 32 %. If the date repeats itself, it may provide 10 % correction+ a strong purchase opportunity.
The market withdrawal always feels pain at the present time, but it is nothing new. Since 1950, the S&P 500 has seen correction (a decrease of 10 % or more) almost every 19 months. Since 1980, the average decrease within the year was 14.3 %, making declines of two numbers relatively common. Meanwhile, bear markets (decrease 20 % or more) occur once every six years on average.
Given that I am currently underweight in public stocks, I am keen to buy DIP. But what excites me more? Buy a Dip for my children-I hope they are estimated at 10-15 years on the road when they are in high school or kidney.
Readers, how long do you think this trade war will continue? Will you pay capital to real estate and pay home prices? How do you put your investments?
Release responsibility: This is not an investment advice for you, only my ideas on how commercial wars affect different origins. Please do your due care and invest as the risks and financial goals.
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