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Why investors shouldn't fear Trump, terror attacks or Jeremy and Theresa

Ken Fisher
Donal Trump infront on the American flag
Terror attacks; Trump tweets, Russia and the adventures of Donald Trump, Jr. (Source: Getty)

Here's a short list of alleged market risks I haven't worried about the past few months: Terror attacks; Trump tweets, Russia and the adventures of Donald Trump, Jr.; Jeremy's jousting and Theresa's torments; those danged FANGs; new all-time market highs; North Korea; falling oil prices; Qatar and Mid-East diplomatic drama; Chinese debt; the Great Repeal Bill.

You shouldn't, either. Markets pre-price all this stuff. If you're trading on common headlines, events and chatter, you aren't thinking like markets.

Stock, bond, currency and all similarly liquid markets absorb widely known information in an instant. By the time you learn of an event or read about some hot trend, so have millions of others. They formed opinions - bullish, bearish, fearful, contrarian - and traded them into relatively profitless oblivion.

People often think "information" means facts and figures like economic data and earnings reports. But it also includes opinions, rumours, speculation, fears, cheers, hot tips and so much more. The louder the hype machine, the more you should tune it out. Hype zaps surprise power.

Investing edge

To get an investing edge, you must know something others don't. So, when media harps on Trend X or Event Y, always ask: Do I know anything others aren't writing about?

For months, investors globally have obsessed over President Trump. He is the primary focus of nearly all media since last autumn. Unless you know something about him no one else has said, anywhere, your opinions won't help you. Doesn't matter whether you think he's great, awful or in between!

Nor do opinions about Russia ties, impeachment chatter, Don Jr.'s emails or Ivanka Trump's dresses. All are old news to markets. Then, too, where's the surprise power? After the last six months, about the only way President Trump could truly shock is to dye his hair black. Markets already showed they don't care about any of this. So why worry?

Same goes for all the handwringing about Brexit talks and Repeal Bill drama. So much chatter! Everyone has opinions, good and bad, about financial rules, Euratom, airline access, citizens' rights, Welsh and Scottish consent and whether London can remain a financial hub.

Half the world seems to think a post-Brexit Britain will be isolated - the other half foresees a free-trading juggernaut. Pundits warn of a City exodus but, judging by all the skyscrapers underway, the commercial real estate industry thinks otherwise. These competing hopes, fears and speculation are all priced.

Media harping usually fizzles fast. Like the FANGs! Before early June, few knew FANG was an acronym for Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Google (GOOG). But after big Tech stocks plunged on 9 June, everyone knew the famous FANGs.

Then FAAMGs, when Apple (AAPL) and Microsoft (MSFT) replaced Netflix. But none of the chatter helped - media hopped on the bandwagon after FANG's fall, not before. Yesterday's returns don't predict tomorrow's. Reacting to myopic moves isn't a moneymaker.

Don't ignore media

Read it to see what everyone talks about, so you know what you needn't fret or focus on. That's your real edge. And while everyone else worries, keep owning stocks like the below.

What tends to rise as expansions take flight? Spirits! Not just animal spirits - distilled spirit sales soar, too, as rising incomes spur revellers to ditch cheap beer for fancy cocktails. Great for France's Pernod Ricard (RI), the world's second largest distiller.

Pernod boasts top brands in most spirits categories, including a 27% share of the global gin market - perfectly positioned for the growing Ginaissance. With shares trading at a 15% discount to distilling peers for no good reason, buy them and toast the bull's continued march.

Commodity prices are still swirling the drain, but don't avoid Materials stocks full stop - just be choosy. Skip the struggling miners and buy less resource-reliant firms like Switzerland's LafargeHolcim (0QKY), the world's largest cement producer by market cap.

It should benefit as the global expansion keeps driving construction in Europe, North America, and Asia. Relatively cheap at 15.7 times my 2018 earnings estimate and yielding a best-in-class 3.7%, it should cement strong gains.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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