Never thought I would say this, but I am becoming a proud America Firster.
You know the American First people. They were the ones who wanted to keep us out of foreign wars, stay at home, built a moat. But on a day like today -- where the machinations of a country famous for the invention of the cuckoo clock does something that looks cuckoo sending our markets down -- I am becoming an American Firster right before your eyes.
Why do I want to become one? Let me start with the foreign wars that I am trying to avoid, notably the currency war going on in Europe. Out of nowhere the Swiss decided to make their currency stronger vs. the euro, one of those necessary but still shocking things that the country had to do to keep hot money flowing out of euro-denominated banks into Swiss franc-denominated banks.
The banks were simply becoming too big a part of the country's economy and we have seen that can lead to disaster, as it did in Ireland, in Cyprus and, ultimately, Iceland. But the move stunned currency traders worldwide and caused some to fret that companies that owe Swiss banks money might not be able to pay them back because the currency instantly got so strong.
Now, none of that really matters to me. Which is why I want to be an American Firster. I almost never talk about currency because I used to dabble in them. Once I bought millions of dollars' worth of the old Dutch guilder on a hunch that Dutch bonds were about to rally. You had to buy the currency first before you could buy the bonds because you couldn't buy the bonds directly with the dollar.
While the trader was buying the guilder I stepped out to get a burger and fries from Burger King. Man, this was about 24 years and, yes, 24 pounds ago. While I was having it my way at the King, a Russian coup occurred against Gorbachev and when I came back a half hour later the traders had their way with me and I had lost about $250,000. That was one expensive char-broiled bond trade, as the guilder just got crushed vs. the dollar.
That's the kind of thing that can happen when you stray overseas. Of course, the big gunslinger guys who come on air and write are always doing things like this, going long the pound and short the Swiss franc or long the forint and short the zloty or ganging up against the peso, kiwi or whatever.
Maybe they never go to lunch
But the key takeaway is that this stuff is impenetrable to all but the pros and even they get it wrong all of the time, so what's the darned point? When in doubt you have to remember what Clint Eastwood taught us in that tour de force finance movie "Magnum Force": A man's got to know his limitations.
To me it is Exhibit A that you want to stay on shore right now or own stocks of companies with very little economic sensitivity.
That's why I always say -- repeat after me -- "what's the Swiss franc have to do with the price-to-earnings ratio of Bristol-Myers?" That means that if you own a stock like Bristol-Myers (BMY), you are pretty darned immune to this kind of thing. Most of the big smart guys laugh when I say it these days, but, believe me, when they aren't laughing out loud they are thinking, "yeah, why am I making it so hard for myself?"
Second reason to be an America Firster without the religiously-challenged implications of fellow travelers of the deceased variety, like Lucky Lindbergh and Henry Ford?
We are doing really well in this country and these other places are just floundering around doing a whole lot of nothing. Lots of people are waiting to see what the European Central Bank is going to do to revive growth. You think I know what they are going to do? You think the other people who talk about it know? I want to know how much bleach Clorox (CLX) is going to sell. I can game that. I want to know if Merck's (MRK) Alzheimer formulation may be superior to that of Biogen's (BIIB). I want to figure out how to beat others to the Celgene (CELG) punch.
But trying to divine what the ECB can do when Angela Merkel, AKA Herbert Hoover in a pantsuit, is going around lecturing much poorer nations how they should have balanced budgets? Who needs that headache? Who wants to be hostage to a selfish-as-all-get-out country that takes advantage of the euro to sell Mercedes Benzes and Volkswagens that would be too expensive otherwise if they still had the Deutsche mark?
Third reason I want to be an America Firster? Have you noticed that we seem to be the only country on earth where anyone is doing anything that could be blockbuster down the road? Where are the European biotechs? Where's the European social media stocks? Where's the European cloud businesses? The only one I know is SAP (SAP) and that's run by Bill McDermott, who's an American and an Eagles fan! I know Sony's (SNE) working on a Jim-Dandy expensive new high-def sound system. But to me it will always be the outfit that brought you the Walkman.
Sorry, I make more money when I stay domestic.
Fourth reason to be an America Firster, at least when it comes to stock picking? The stronger the dollar gets, the more goods we can buy cheaply from overseas. Go to a Restoration Hardware (RH). Look at all of that stuff from Europe? They source it there, so you think they will cut the price for it here? No, no. Can you imagine their gross margins on that sweet Italian fabric?
Fifth reason to be an America Firster? We have the goods! We have the natural resources. We the brain power. We have the universities. We have the upward mobility. The playing field is not level and we are at the top, not the bottom. Why go to the bottom? We aren't hostage to the Russians for our natural gas. We've got the cheapest power in the world. Bizarrely, the most stable government. The smartest and most rational central bank that knows a balanced budget took a recession and turned it into the Great Depression in this country. We've got the finest corporate governance -- not kidding! Plus, best of all, guys who speak English.
Remember, right now the market is being gripped by a horrid mood disorder where big-trigger pullers think it is good when oil goes up and hate it when interest rates go down. They don't like shocks, like when a neutral nation with some really nice mountains and lakes defends its banking system by shocking the speculators with a bizarre reversal of a years' long philosophy.
So of course that means sell, sell, sell. Sell everything. Even the stuff that should go higher off this kind of manufactured crisis.
I say don't buy, buy, buy. But use the overall weakness to pick up the America First stocks that are all or almost all domestic that have nothing to do with trying to call a bottom in commodities because commodities per se aren't America First stocks, they might as well be China First stocks.
Oh, and don't worry, there's plenty of them to pick at. We write about them all the time.
America First. It never felt so good. I hope one day you say, "he kept us out of Foreign Currency Wars," and you think not of Woodrow Wilson, but me, the president of Cramerica.