Stock Pile
American financier and statesman Bernard Baruch famously said, “The main purpose of the stock market is to make fools of as many men as possible.” Well, in that case, the market is having a hell of a month. On Friday, after almost no negotiations, Trump posted that Iran would give up its uranium and open the Strait of Hormuz. They even agreed to never close the Strait in the future. The market soared on the news. The weekend arrived. The Strait was closed again. Even delivered by a trusted and consistently honest source, these deal claims would have come off as outlandish. But from this source? After misleading at every turn during the war (and every other topic he’s ever touched upon), you’d have to be a little crazy to have believed Trump. So, then, it might be fair to wonder whether the market is out of its friggin’ mind. The market behaving in mysterious ways, especially over the short term, is nothing new. John Maynard Keynes explained: “Markets can remain irrational longer than you can remain solvent.” In this case, as Kyla Scanlon writes in the NYT (Gift Article), “The stock market has been trying to ignore the war in Iran.” Why the Stock Market Makes No Sense Right Now. This nonsense is especially relevant at the moment, because a rational stock market appears to be one of the few guardrails protecting against Trump’s most destructive impulses. “President Trump deeply cares about the stock market, and if the stock market had been selling off, there is a good chance that this war would have been over a while ago. More broadly, the markets are showing the single lesson that the past 40 years have taught them. It will always be saved.”
Look, I’m in the market. I really want the market to go up. But I’m worried about a market that discounts the risk of very risky world events. And I’m even more worried about a market that discounts the risk posed by the leader of the world’s largest economy, and seems, somehow, to ignore the history of instability, lies, and crazy behavior he exhibits. Even if the Strait re-opens tomorrow, those risks remain. The market needs to stop reacting to Trump’s crazy lies and start reacting to the fact that we have a crazy liar in the White House. (That line should enter the canon of great economics quotes. On the off chance it doesn’t, I’ll leave you with one more from Keynes: “In the long run we are all dead.” Today’s investors probably even see that as a buying opportunity.)
+ When it comes to the Trump tariffs and the Iran war, there are still some rational traders. Insider traders. Traders placed over $1bn in perfectly timed bets on the Iran war. What is going on? And, the insider trading suspicions looming over Trump’s presidency. (Maybe the safest investment you can make in 2026 is to be long on corruption…)
