Skip to main content
By Steve Butler, Founder & CEO (

A recent trip to Vietnam, Cambodia and Laos left me in awe of the stunning display of economic progress in that part of the world.  Driving in to Ho Chi Min City from the airport offered a testimonial to the success they are achieving as they move toward a free-market economy.  A string of automobile dealerships included those of Rolls Royce, Aston Martin, Jaguar, BMW, Mercedes --- and a complement of other major brands.  Our guide pointed out that changes happened overnight in 1995 when President Clinton lifted the sanctions that had persisted for the twenty years since the end of the war in 1975.  Schools immediately terminated Russian and French language classes and switched to English.

At one wide intersection, I estimated that there were easily 200 motor scooters, like a battalion of soldiers, waiting for the light to change.  There are over five million scooters in a city of 12 million people and they even have a scooter version of Uber known as “Grab.”  You dial up a ride on your phone. A guy on a green scooter with a matching uniform pulls up, offers you a green crash helmet and off you go.  We hired scooters with drivers to take us on a food tour of street “restaurants.”   The economy is literally “humming along.”   

Meanwhile, the Chinese, Japanese and Australians are all building infrastructure including bridges on the scale of our own Bay Bridge.  In Laos, the Chinese are building a high speed train to bring tourists and commerce to that mountain paradise.  Foreign countries are offering to build these projects at no cost in some cases in exchange for the right to do business.

A trip to today’s Indochina offers a reminder of the extent to which we are all part of a global village with the power of economic cross-pollination.  The fight over balance of payments issues just ignores the comparative advantage that creates cheap products for us to buy which then allows us to be able to afford more of what we create domestically.   

Which brings us to the trade war.  Mainstream economists point out that both sides lose in a trade war, and the stock market turbulence indicates agreement of the business community. Gary Cohn, the former Director of the National Economic Council, pointed out that President Bush introduced steel tariffs. While it did save 6,000 steelworkers’ jobs, those jobs were offset by hundreds of thousands of job losses across the economy. The tariff-induced price increases (effectively “taxes” that we pay) adversely affected sales of any product involving steel --- and ultimately threatened the jobs of 6.5 million workers in those steel-consuming companies. It was a repeat of what had happened in the ‘20’s and again in the ‘50’s, so to paraphrase Ronald Reagan, “There you go again…”      

The months ahead will be pivotal as the markets come to terms with not just tariffs but our internal political turmoil as well. Nobody is ever a hundred percent confident in the wisdom of making a specific investment decision. It is, at best, a guess at correctly assessing the probability of success.  There’s always that “wall of worry” to clamber over.  We have, for example, passed the tipping point where the RATE of growth has just started to slow down.  That means the economy is still growing, but that it is not growing as fast.  Historically, this is a forward indicator that lets us know that stock prices will be softening sooner or later. The model, by itself, indicates a mild recession in 2020 which may already have been reflected in the year-end market performance.

Beyond just the financial data, we have to consider political factors like the trade war, political turmoil and aggression from Korea, Russia and China.  Moreover, there’s always some Black Swan event that, by definition is impossible to conceive of much less predict.  But unlike the Black Swan financial collapse of ’08, today’s paralyzed fractious leadership would be powerless to confront the problem as effectively as the experienced Bush and Obama administrations.  

The investment antidote is not a retreat to cash but a segue toward a higher percentage of bonds  coupled with stocks in large companies that pay dividends ---  the mutual fund solutions would be bond funds or large cap value funds.  Then, we grip the arms of our chair as tight as we can, and, as our president is fond of saying, “we’ll see what happens.”