We Should Have Hedged Trump
If you’re like me, then you’re quite a bit poorer today than you were a week ago, and the reason for that is President Trump’s Liberation Day tariff plan that panicked the stock market. In other words, mea culpa on the whole “you can’t hedge Trump” thing. We all should have bought some puts.
That said, as I told our BD associate Holly while we were all commiserating about our paper losses, the stock market has panicked a lot from time to time in the past and things have generally worked out ok. So keep calm and keep buying, but also don’t invest more than you can temporarily and on paper afford to lose.
As this was all happening our CEO Brent and I got together to talk about the market volatility and how it might affect our own appetite for making new investments. We agreed that it shouldn’t and wouldn’t. With high-quality long-term capital and no need for debt, we’re well positioned to stay open for business no matter how much the markets puke, but I’d also be lying if I told you that I wasn’t hoping that market volatility freaks out our competitors. After all, the best time to be open for business is when customers want to buy and your competitors can’t sell.
Because that’s ultimately the Permanent Equity model in nutshell. When capital is cheap and everything is going up, every strategy seemingly works. But when the market turns and others are freaking out or frozen, well, you have to be able to be open for business in order to work.
Welcome back to Season 5.
– Tim
