How to Survive
A guide to navigating the Trump 2.0 Paradigm Shift. Synthesising Lynch with Munger & Turning things on their head.
On April 5th I published 🎙️ POLICY ERROR? and followed up with 🎙️ MAGA AS RELIGION, sharing my thoughts on the broader geopolitical and economic setup.
—> Listen to more of Philo’s Thoughts (Short Podcasts) here.
The overarching theme in these two voice notes? 👇
I explore the ultimate belief in American Exceptionalism — and the idea that whatever happens in the meantime, in the end the world will bend to this universally valid law. This seems to be the unshakeable belief in the hearts and minds of Trump 2.0 and its supporters.
The key point that most are missing (and one we’ve been making for years now) is that on the reality front, this “Exceptionalism” has been weakening for a long time.
The US, once a beacon of global dominance is now facing multiple challenges:
Worsening Fiscal Position
Further reduction in prestige on the global stage
Reduction in military power on the global stage
A rise and rise of alternatives (e.g. China etc.)
Further social decline
Inexistent social and political cohesion etc.
An all out decline in the United States’ everything supremacy position
Loss of competitiveness etc.
But the rejection to contemplate and understand these harsh realities put many in the trap of taking Trump 2.0 election commitments and objectives as a foregone conclusion.
It’s like David Einhorn’s quote on passive investing and broken markets from last November:
“Passive investors have no opinion about value. They’re going to assume everybody else has done the work.”
In the case of Trump 2.0 — everyone assumed that because Trump was saying smarter things than what Biden was doing; somehow everything would magically be perfect. That debt and competitiveness problems would vanish because Donald speaks so well and has answers for everything. The hype was real…
But now reality is catching up to expectations — and violently.
“My Bad”
A Bloomberg article from April 8th discusses Bill Ackman’s Mea Culpa on supporting Donald Trump in the US Presidential Elections.
“I don’t think this was foreseeable. I assumed economic rationality would be paramount.”
When The Donald was elected, Bill said that the US was stepping into “the most pro-growth, pro-business, pro-American” administration he’d seen in his adult life.
You know my views on Trump 2.0 and Bessent’s Plan, as we’ve written several pieces on the matter — but I wonder, why did everyone miss this? Why did everyone believe the hype?
Here’s a chronological list of my Trump 2.0 pieces, followed by my survival cheat sheet for navigating this storm.
The first Trump 2.0 themed piece, now released from paywall.
The Spell of Donald after he was elected.
A discussion on Bessent’s plan to reset problems and save the US.
And from last week a piece to highlight a few things that Bessent et al. seem to be missing (second-order effects etc.) about their plan of action and where it will lead..
SURVIVAL
Remember that valuation is not only about the past — in fact, it’s mostly about the future. The unknowns (whether known or unknown!) are usually the things that kill you in the end.
This is why I fear most for “blind value” investors in this market, they are more likely to get chopped up first. This is because the more the future diverges from the past, the more useless are earnings multiples and other financial ratios.
So how does one tackle this problem? How does one survive through very high uncertainty and unpredictability?
—> “Invert, always Invert” or put otherwise “All I want to know is where I am going to die so I may never go there”
—> After we turn things on their head, we will put them in the context of Peter Lynch’s 6 stock-type categories.