Trade War Bump
1 Jun 2019
By Simon Angelo
Investing is like a lot of things in life. You push forward, make some progress, make some gains - and then the weather changes and you slip back. Over the long term, keep going and you keep gaining. Along the way, you've got to navigate the dips - and defend against them.
Toward the end of this month, most stocks pulled down heavily. There were a couple that jumped - I'll tell you about those in a moment. But overall our composite portfolio pulled down -0.44%.*
The defensive strategy assisted a lot this month - with dividend payments offsetting much of the falls. And we took the opportunity to buy some new positions at good prices.
Trade war wobbles
The key reason for the drawdown in stocks, particularly in America, is the Trump led US v. China trade war.
Trump has fair reason. The Chinese economy was swallowing more and more factory capacity, to the point where America was threatened with mass deindustrialisation and wholesale job loss.
I saw the impacts of that first hand. A friend of mine had a small factory producing a useful home appliance in south Auckland. He employed workers on a production line. But he couldn't compete with the few hundred dollars paid to Chinese factory workers for a whole month of work - many of whom slept on site in 8-to-a-room dormitories.