The stock market is on a volatile ride this week in part because of the tariff back-and-forth from the Trump administration and various countries. But Third Point’s Daniel Loeb believes investors should relax. The hedge fund manager believes stocks will benefit from the macro environment going forward, even with periods of volatility brought on by President Donald Trump’s unique policymaking. “Overall, Third Point expects the environment for investing in equities to continue to be favourable, with the caveat that there will likely be periodic dislocations caused by the unconventional approach of this Administration in conveying and enacting policy that affects markets and the economy,” Loeb wrote in his latest investor letter dated Tuesday. The famed investor noted it is important to use critical thinking amid the constant flow of news headlines and policy declarations from the Trump administration. He cited the recent volatility surrounding DeepSeek, an artificial intelligence competitor out of China, as an example of irrationality in the markets. The investor said he believes Trump’s recently announced tariffs against Mexico, Canada and China will be less impactful than the headlines implied. China has retaliated with additional tariffs of up to 15% on select U.S. imports starting Feb. 10. Loeb’s comments struck a more optimistic tone than some other high-profile investors, who have warned about the negative effects from Trump’s tariff and immigration policies. Point72′s Steve Cohen said some of Trump’s policies will stoke inflationary pressures and hinder consumer spending, and he expects the broader market to get bumpy in the second half of the year. Paul Tudor Jones said Monday he believes the financial markets are far less stable entering Trump’s second term than they were in 2017, leaving no room for policy mistakes. Third Point’s flagship fund returned 9.2% in the fourth quarter, bringing its 2024 gains to 24.2%. The performance outpaced the S & P 500’s 23.3% gain last year. “The Investment Manager remains optimistic about the sectors that will benefit from certain of these policies, as well as an increase in M & A and other corporate activity which supports its event-driven framework.” Loeb wrote. The top performer in his portfolio in the fourth quarter included Amazon , Tesla , LPL Financial Holdings and Apollo Global Management , Loeb said.
Third Point’s Dan Loeb says the stock market will be fine despite Trump’s ‘unconventional’ approach
Feb 5, 2025
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