Don’t Panic

Don't Panic. The cover to the eponymous Hitchhikers Guide to the Galaxy says it all. Or, it says most of it anyway. The market, often, regularly panics. It's bath since the "Liberation Day" tariffs are a reminder of this. This isn't a reax piece, though.

The climax of the plot — the book plot, not the political melodrama — comes when supercomputer Deep Thought answers the Ultimate Question of Life, the Universe and Everything.

Truth

42.

That's the answer. Succinct and a little underwhelming.

Douglas Adams meant it as a joke. Fans come up with more colorful theories, though. One apocryphal interpretation to the Question is this: In ASCII, the list where computers find text characters, the 42nd character is an asterisk, "*". You use those placeholders for whatever you want. The answer to Life, the Universe and Everything is whatever you want it to be.

That's like financial markets. You can look at the market and see whatever you want. It can be a casino. It can be a Ponzi scheme. It can be a way to raise money to fund industry. It can be a way to make billions. It can be a way to lose trillions. It can be a way for savers to ensure and grow their financial future.

Mostly, the market comes down to how you — an investor — behave and how much time you have.

If you have a short time. Then, yeah, maybe panic. What are you doing in the stock market, anyway? If you behave like it's a craps table, that's what it'll be.

But if you have a little more time — decades — and if you behave like the market's a long-term wealth-creation machine, that's what it'll be. Lamplighter makes this choice. It’s the one it preaches to other investors. It's a framework it uses to evaluate investments.

Consequences

The DJIA index liberated itself from more than 1,000 points on Thursday, April 4th. Ouch. It smashed the 760 points drop in the 1987 crash. Black Monday 1987 saw the Dow lose 30% of its value. Liberation Day, it only dropped 4%. The DJIA isn't a very useful index. And looking at the points drop isn't a useful framework to evaluate it. The point is that every market blip can be an insurmountable, crushing force if you look hard enough.

Other than somewhere between a little bad and really bad, I don't know how the tariff debacle will turn out. Neither does the Trump administration. Neither does anyone else. There's more economic uncertainty in the world this week than there was last week.

Hitching a ride forward

Rather than hang its hat on how tariffs will turn out, Lamplighter goes around looking for more certain, more durable pieces of the puzzle — things that it can know something about.

On the same day Trump announced tariffs, Lamplighter portfolio company, Marex, provided an update to investors. CEO Ian Lowitt's comment on the incoming tariffs was "I guess it's Liberation Day, or whatever." In an already volatile Q1, Marex grew revenue by 25%. It grew profit by 39%. This after growing revenue 28% in 2024 and profit by 40%.

The company moves risk. Some company wants to get rid of some risk, another company wants to take it. Marex facilitates this. Clients paid it well for this service in 2024 when markets were mostly humming.

Lamplighter's investment doesn't rest on one week of activity, but the dislocation or the dislocation and relocation of the world economic order probably doesn't hurt the market for moving risk.

Lamplighter may not know that One Big Thing about where the markets are headed in the next week, month, or year. It may not know the answer to Life, the Universe and Markets. Instead, it hitches its holdings to a long time frame, and more knowable things than, say, the outcome of fan-fic-inspired, ChatGPT-generated trade policy or the whiplash-inducing backpedaling away from it. That way when chaos makes a cameo in financial markets, Lamplighter can keep its head, rely on the value in its portfolio and not panic.

Disclaimer: None of this is investment advice. It's meant to illustrate ways LCM thinks about investing. Things that LCM decides are good investments for LCM and its clients are based on many criteria, not all of which are covered here. Some or all of LCM's ideas may not be suitable for other investors. LCM does not recommend investing either long or short any position mentioned. LCM may own positions in some of the companies mentioned. Some of its ideas will lose money — investing entails risk. See full disclaimer here.