Bill Strong on the rise of Donald Trump

The ascension of a Donald Trump administration seems to represent a genuine and meaningful disruptive force in American government—and indeed maybe in society at large (given the growing severity and duration of America’s problems, it is not surprising that such a political reaction has finally occurred).  Obviously, we cannot predict how much of the agenda for change will be implemented--but history suggests much of it will be difficult.  Nor can we say for sure what its net outcome will be. 

However, we would note that Trump’s optimistic populist prescription for addressing America’s decline does NOT include a call for popular sacrifice.  There is no acknowledgement that total debt (and the burdens of servicing it) in our country, and the world, is unsustainable.  In other words, there is no call for Americans to reverse our decades-long habit of living way beyond our means, as huge imbalances in borrowing and the current account show.  Rather, suggestions of further gains are legion. 

In addition, I doubt if Republicans’ call for a return to “common sense,” is referring to stock market valuations.  As chronicled below, stock valuations in the US are beyond “manic”.  In other words, we see no evidence that new leadership acknowledges the massive valuation anomalies in markets.  A renaissance of faith in “American Exceptionalism” seems to justify the severe over and under-pricing of assets and currencies in the global marketplace. 

~ Bill Strong, co-portfolio manager, Eschaton Opportunities Fund, Quarterly Letter Q4 2024, January 27, 2025