Transportation Investing in a Turbulent World
Simple rules advance economic results. Investment strategy is the evolution of a central idea through continually changing circumstances. Successful investors are focused, disciplined and consistent. They think a great deal about what they do and how to do it. They think like owners, follow basic principles, and get interested in opportunities when prices go down, not up.
A new world order was allowed to develop during the eight years of the prior Administration. Today we are faced with rising challenges abroad and political polarization at home. Eight years of cheap and plentiful money buoyed our markets. Against the backdrop of an improving U.S. economy, and recognizing that geopolitical tensions have the potential to disrupt markets, the current Administration has the challenge of pushing a business oriented agenda through Washington. What will Congress be willing to pass?
Confronting turbulence is more of an art than a science. Pilots are trained to avoid thunderstorms. Yet clear air turbulence often appears. What does a pilot’s training instruct? Keep flying! When turbulence is encountered, you slow the aircraft to a designated ‘turbulence penetration speed’ to prevent damage to the airframe. You might request higher or lower altitudes or ask for a revised routing. A political example? The Affordable Care Act requires insurers to offer underpriced plans without any compensation from Washington. Republicans refused to appropriate funding for subsidies. Without funding authority Obama went ahead and distributed subsidies anyway. Trump may now stop insurance subsidies in an attempt to bring Democrats to the table to negotiate a health care solution. As pilots might say, ‘Strap in’. Getting things done requires coordination of economic and political will.
Should you pay attention to headlines or to fundamentals? What’s good? A lot. U.S. economic growth is accelerating. U.S. consumers are confident, earnings growth is positive, borrowing cost remains low, the job market is in good health, and importantly, business sentiment remains strong. Aviation is a global business and is expanding faster than GDP. People want to travel, rail traffic is improving, and both transport modes are growing more efficient. Momentum is solid.
Successful investing, like successful leadership, requires a positive agenda and multidimensional thinking. Like flying, predicting market change is more of an art than a science. You manage daily challenges by following a basic set of investment principles. So scrutinize your assumptions, embrace uncertainty as a policy, seize opportunities, and be responsible. Ensure your investments reflect your values and then don’t look back.
It’s a long-term game with short term opportunities. Risk comes from not knowing what you are doing. Transportation investment success results from recognizing transportation serves global growth. The future is complex. With solid insights and with greater levels of certainty and control performance will catch up with expectations.
Interested? Call the air and rail transport investment specialists. Call RESIDCO.
 Jack Welch had six rules: face reality, be candid, be a leader, change before you have to, don’t compete without a competitive advantage, and, control your own destiny (or someone else will).
 Trump offers China better trade terms for help on North Korea.
 Derived from ‘How to Choose’, The Strategic Rethink Series, www.rand.org.
 Peter Atwater, Financial Insights.
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