December 2016  | Client Note


  • Trumponomics & you
  • Gold - the next steps
  • Investment ideas going into Q1 '17
The coming Trump Administration - Are US stocks in danger of becoming overvalued?

US stocks have rallied significantly since Donald Trump was elected president, mainly due to his promises of increased fiscal stimulus through public infrastructure programs, with the stated objective of boosting inflation and economic growth. But have markets been overly enthusiastic about these proposals, considering he has not even been sworn into office yet? Markets seem to have been pricing in future annual GDP growth in excess of 3.5%, yet we know that structurally the US economy might only muster a meager 2% pa expansion due to the shift from a production to service orientated economy, the dismal rate of labour participation, and long-term savings trends. Further evidence is illustrated by the "neutral" recommendation of the S&P 500 ETF (the most common gauge of the US stock market), with relative valuation metrics all above 2, considered overvalued in many contexts. Adding fuel to the fire is a potential trade war with China. Infrastructure spending also requires widening the government deficit, something Republicans have been vehemently against and that the US simply cannot afford. 

Gold - The next steps

Gold has significantly underperformed since the US election, mainly due to short-term speculation and appreciation in the US dollar. We think that, again, markets have reacted too extremely in such a short period, which could be leading to a bubble in the US dollar, which benefits no one in the long-term. We continue to hold the metal because we believe that real interest rates could be lower than expected, and to insure against the geopolitical risks stemming from the ascendance of right-wing populism in Europe, a massive threat to the future of the European Union.


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What ideas do we have going into 2017?

For the moment we are very focused on re-entering our allocations to Vietnamese & Indian stocks, which continue to look fundamentally sound, but we would ideally like the US Dollar to weaken slightly in order for us to time these allocations effectively. Though we have stated our skepticism relating to the short-term appreciation of US assets, we believe the economy is improving and we have found some great value opportunities in US banks and, potentially, US healthcare, dependent on the outcome of the repeal of the Affordable Care Act.

Some other ideas we are thoroughly looking at are: oil companies, which have come into play because of the recent OPEC production cut agreement, which have also, interestingly, made Russian stocks extremely attractive, if the agreement holds and prices stabilize. Some other assets we are looking at are: short-duration bonds, to hedge against interest rate increases, as well as Danish stocks.


If there is any way which we can assist you, please do not hesitate to contact us.

Sven Roering
Managing Partner
+84 8 3821 5367

Tenzing Pacific Investment Management operates as a division of Tenzing Pacific Services Limited. Tenzing Pacific Services Limited is incorporated under the Companies Ordinance, Chapter 622 of the Laws of Hong Kong. 
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