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Bereans VLOG (2/7/2019)

07 Feb 2018

Mark Caleb Smith

Today the Bereans discuss the infamous Memo, the roller coaster stock market, and SpaceX.

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Nathan D. says:

February 8, 2018 at 10:11 am

A question for the Bereans on Trump trade… (Dr. Haymond, does that qualify as a “TR”?)

Do you think that, assuming the economy keeps getting better, the benefits of the tax bill, deregulation, etc. will make protectionism less “urgent” for Trump? It seems that many places are seeing a revival of economic fortunes as a result of these other factors, so do you all think a stronger economy will mitigate the desire for protectionism in any way.
- Nathan D. says:
  
  February 8, 2018 at 10:14 am
  
  Guess it was already used as a “TR”… re noticed it in a previous post.
- Jeff Haymond says:
  
  February 9, 2018 at 9:07 am
  
  Unfortunately no. The issue for Mr. Trump is not economic, but to show his concern for those that are negatively affected by foreign trade. Keeping this constituency happy is critical to him staying in power. At least this is my opinion.
  - Nathan D. says:
    
    February 9, 2018 at 11:00 am
    
    I understand he wants to keep that constituency happy which is why he supports those policies. Perhaps I should rephrase the question. Do you think that the other economic factors could improve conditions for that constituency to where protectionism is no longer as big an issue for them? And If the desire for those policies is lessened among the constituency itself, would not the political aspect become less “urgent” for the President?
  - Theophilus says:
    
    February 9, 2018 at 11:15 am
    
    But that constituency doesn’t want protectionism for sound economic reasons. Free trade is part of why we’ve been steadily growing for almost 8 years. I don’t think they are protectionists because of the economy, it’s more about “playing fair” and “keeping our jobs.”
  - Nathan D. says:
    
    February 9, 2018 at 1:20 pm
    
    I am not saying they want protectionism for sound economic reasons. I know they want protectionism because of “playing fair” and “keeping our jobs”. What I am saying/asking is if other economic factors get them jobs, etc then would not the mentality of “playing fair” and “keeping our jobs” be at least somewhat lessened? And if this happened, would it then not logically result in less political pressure on Trump to pursue protectionist policies if his other policies (tax cuts, deregulation, etc) are helping that constituency to do better without protectionism in the first place?
  - Theophilus says:
    
    February 9, 2018 at 1:33 pm
    
    I think it’s more a moral question though. As an analogy, if you think taxation is theft, the effectiveness of a government expenditure isn’t going to change your position. An improving economy doesn’t make ‘unfair’ things fair to a protectionist. It’s not a pragmatic question, really, but an implicit ethical one.
  - Nathan D. says:
    
    February 9, 2018 at 2:53 pm
    
    Yes, but does the average “Joe Factory Worker” in Michigan or Pennsylvania think that way though? Is not the very basic issue for these people having, or not, the ability to put food on the table and provide for their families, etc? When they see their factory job disappear because it went oversees, then yes, to them it will be a moral, ethical issue. They will favor protectionism because the main reality to them is no job, hence no income. But do we really think that they are so confirmed in their mindset that if another job comes along that gives them the income they need, they will still have the same degree of frustration over their old job?
  - Theophilus says:
    
    February 9, 2018 at 3:04 pm
    
    Yeah. My grandparents see it this way and they don’t work anymore. It’s just that it’s not right what China gets away with in their minds. I don’t think this part of the base is all just potential factory workers.
  - Nathan D. says:
    
    February 9, 2018 at 4:35 pm
    
    The factory worker was an example. I was not trying to say that those who favor protectionism are all mostly factory workers.
  - Theophilus says:
    
    February 9, 2018 at 8:17 pm
    
    Of course, sorry. I just meant that, in light of the convictions of the demographic, it’s unlikely that economic performance is what sways them.
Carter Miedema says:

February 9, 2018 at 4:01 pm

Why is it that people consistently associate the stock market directly with economic performance? Over the last year, I’ve had so many people tell me that the economy must be great because the stock market continues to climb, and now that it is falling, these people have fallen into a panic. What can be done to educate people that the Dow is not the only measure of economic health?
- Matthew Beal says:
  
  February 9, 2018 at 11:54 pm
  
  More micro econ classes might be helpful. One of the foundations of solid investing is that you just need to grit your teeth sometimes and ride it out for the long run. Timing the market just doesn’t work, and just because the market is falling doesn’t mean the economy is slumping. The underlying fundamentals are still good, but the return of volatility is going to spook some people. Better to happen now rather than later.
- Nicholas Redic says:
  
  February 10, 2018 at 10:55 am
  
  Hi Carter,
  
  You’re right that the ‘Market’ and the ‘Economy’ are not the same, and we should not use the terms interchangeably. People probably look at the stock market simply because it’s often discussed and easy to monitor. However, to get a more accurate picture of the economy, you need to look at other metrics that pertain to consumer confidence, building permits, personal incomes, employment rates and others.
Ellie Juengel says:

February 19, 2018 at 1:30 am

I really liked what Professor Wheeler and Professor Haymond had to say about the stock market. Everyone is freaking out that the stock market has risen by so much. This was bound to happen. The stock market has been way too normal without much change for a long time. As long as people don’t need their money soon they shouldn’t be worried.

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