Josh Brown nails it: Donald Trump is really a technical analyst.
Trump doesn’t care much for fundamentals — in the political sense, the fundamentals would be policy. His ideas about healthcare (competition!) and immigration (round ’em up!) represent first-level thinking of the highest order, although they are facile enough to be communicated in today’s 140-character size / attention span limitation.
But what he seems to have a masterful expertise in is the polls — which, in market terms, would be equivalent to price. He’s a technical analyst.
Josh uses the famous Ben Graham quote about markets being a voting machine in the short run and a weighing machine in the long run as a jumping off point for this idea.
And he is 100% right.
It seems that the problem Trump has posed for the establishment all along is that his numbers simply don’t reflect the underlying message of whatever it is he feels like saying on any one day.
And while Marco Rubio — like Scott Walker and Jeb Bush before him — knows what to say to preach a conservative message that outlines what the GOP thinks is the best path forward for America, Trump is winning.
On Saturday morning we got the latest annual letter from Warren Buffett, perhaps the most famous “fundamental analyst” around.
Buffett talks in his letter about the difference between book value, intrinsic value, the differences in accounting methods and what his company is or isn’t really worth.
But there’s an old saying in markets — and one that is particularly favoured by technical analysts and short-term traders: “Price pays.”
In 2015, Berkshire stock went down 12.5% on the market while the per-share book value rose 6.4%. The problem is that you don’t trade the per-share book value, you trade the market price.
Owning Berkshire in 2015, then, was a losing investment in this view.
And you don’t elect a president that says the right things, has the right message, and finishes third: the winner takes the White House.
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