This article is from this week's Barron's. It discusses how many business are beginning to speak about the effects that tariffs are having on their supply chains.
CEO's are slowing developing plans to adjust their logistics models to deal with the effect of tariffs. Costs used to be the main driver of logistic decisions - not anymore!
In July, I wrote about what I thought the biggest loss of the tariffs would be (Tariffs - What is the biggest loss? The intangible of business trust.).
As businesses start the long, slow and arduous process of adjusting their sourcing and logistics, they will be balancing costs with potential risks, but potential risks will also gain significantly in importance.
The securities markets are beginning to wake up to "smell the coffee". We’re starting to see the “cracks” given the market’s recent pull-backs.
To all of this I ask the questions:
- "Do you have a margin of safety?"
- "Have you evaluated your holdings on fundamentals and not by the market's mercurial actions?"
- "Have you pruned your holdings that are fundamentally weak?"
- "Do you have a wish list of companies to own that are strong fundamentally, but have not yet been priced appropriately by the markets?"
- "Do you have dry powder (cash) when you see opportunities for 'sales'?"
It is always good to be like a good Boy Scout – be prepared.
Be safe, be smart, be prepared, be well read and be successful!
