The following is an excerpt from an essay by Doug Kass, President of Seabreeze Partners Management Inc.
The first few months of the Donald Trump administration have been a test of the President’s business acumen, writes Kass.
“Can his “art of the business deal” be translated into the “art of the political deal” in Washington D.C.?”
“Arguably, the body of evidence is that the administration has not been successful. To some it is failing spectacularly.”
Kass goes on to say that from his viewpoint, the markets are overvalued and risks remain (perhaps dramatically) underpriced.
“Given recent White House developments, the hockey stick projections and consensus of rapid growth in 2017 and 2018 seems to now be pie in the sky,’’ he said.
“By my gauge, the market’s downside risk substantially exceeds the upside reward – perhaps as much as 4:1.’’
Bottom Line
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The President’s legislative and policy agenda will be diluted and delayed.
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Sell stocks as risk is underpriced
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Buy gold as a protective strategy and for diversification purposes