Rajesh Chandra

Trade War with China First assault by Trump administration on China started in 2018 in form of tariffs on Chinese solar panels, washing machines, aluminum, steel and other products. By late 2018 & almost all of 2019 more and more products were subjected to new tariffs. China reciprocated by counter tariffs. In early October – US government blacklisted & banned 28 Chinese companies from doing business in US. Few weeks later President announced that an initial trade deal was reached after China agreed to buy more farm produce from US and allowed US financial firms access to Chinese markets. It was also announced that recent 15 % tariff will be reduced by the US government. It seems cooler heads are prevailing now and eventually there will be pressure on US government to resolve the trade war with a final deal. US wants to keep in mind the interests of workers and farmers of mid-western rust belt to reach a deal with China. Irrespective of whether a favorable deal is reached o

2019 was a blockbuster year for stock markets! Those long on the equity (~ 30 % gain) were handsomely rewarded. Bond market (~15 % gain) also went up. I chose to stay away from bonds and focus on equities for 2019 and it was a right strategy. Method: My profits are calculated assuming buy of 100 shares at market open of Jan 2nd, 2019 and sell at market close at 31st December, 2019. I include dividends as well for total ROI. Broad market index returned a whopping 30.4 % (SP 500 rose from 2476.96 to 3230.78). My recommendation of MGC returned 32.93 %. My 2nd recommendation of utilities index (VPU) would returned 25.45 %. My returns were very close to broad market returns. However, my risky bet in form of “MJ” saw losses.

US Economy is now in the 10 year of expansion. Calendar year Q4 of 2018 was devastating for the stock market which have put market participants in a cautious mode. Everyone is convinced that ‘Recession’ is inevitable but the only question is ‘when’. Currently unemployment rate is at 49 year low. Wages have started rising in US. WTI Crude oil futures have declined 40 % from the peak in October 2018 now trading at $45 per barrel. Lower energy prices give more purchasing power for consumers. GDP estimates for next 2 quarters are not negative yet. Tax Cuts & Jobs Act which became law in 2017 lowered corporate income tax from 35 % to 21 % and most personal tax returns will likely result in higher refunds. Inflation reported by CPI is hovering less than 3 %. It is hard to make a case for an obvious ‘recession’ in 2019 given these +ve data points. There will be interest rate hikes by FED in 2019. But depending on how fast FED hikes interest rates - Yield Curve can enter -ve zone very

I had recommended 2 portfolios. My ‘defensive’ or ‘safe’ portfolio had a loss of 3 % but I still beat the broad market which went down by 7 %. I included ‘consumer staples’ in my defensive portfolio. This sector wasn’t immune to broad scale declines without “ITA, IYK, VCSAX” which represent the same sector I would have been positive. “Aggressive” portfolio met with a 15 % decline. Uncertainties over trade wars with China hit CQQQ massively. 2018 was still a year which saw ‘net’ growth but declining numbers as the year closed in.