On Monday, as stocks whipsawed on shifting news and rumors about the tariffs, I spoke to Berezin, who is based in Montreal, about how Wall Street had gotten Trump so wrong. He told me that many investors who pride themselves on their savvy are in fact just creatures of the herd. “All these cognitive biases that amateur retail investors are subject to, the Wall Street pros, are, if anything, even more subject to them because they’ve got career risk associated with bucking the trend,” he said.
People in finance, said Berezin, are more likely to be punished for being too cautious and pessimistic than for being too hopeful and aggressive. Last year, for instance, a famed strategist named Marko Kolanovic left JPMorgan Chase abruptly when his gloomy predictions about 2023 and 2024 turned out to be wrong, or least premature. Mike Wilson, also known for his bearishness, stepped down from his post as chair of Morgan Stanley’s Global Investment Committee, though he stayed with the company. “You don’t get fired for being bullish, but you do get fired for being bearish on Wall Street,” said Berezin.
Some investors also felt a cultural affinity with the new administration that further clouded their judgment. When wokeness was ascendant, plenty of people in tech and finance quietly seethed at being guilt-tripped and forced to feign concern about social justice. “When the opportunity came to jettison all that, they were happy to do it,” said Berezin. “And Trump enabled them to do it.”
So last October, when Scott Bessent, soon to become Treasury secretary, said that Trump was really a free trader who used tariffs as a negotiating tactic, Wall Street was eager to believe him. “It’s escalate to de-escalate,” Bessent told The Financial Times.
This claim was obviously absurd. Trump has been obsessed with tariffs, which he called “the most beautiful word in the dictionary,” for decades. In his 2018 book “Fear,” Bob Woodward reported that Trump scrawled “TRADE IS BAD” in the margin of a speech he gave after the G20 summit. It makes sense that Trump would see things this way. When he makes sales, whether of Trump University courses or Trump-branded cryptocurrency, he is usually taking advantage of the buyer, and he views global trade through the same zero-sum lens.
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