We Are More Allocated Toward Quality at This Point, Says Diamond Hill’s Burkett

The video discusses the ongoing trade tensions, particularly focusing on Huawei and the potential for a full-blown trade war. It examines the possible impacts on the global economy, corporate earnings, and share prices. The discussion highlights how different companies, like Walmart and Cisco, are responding to tariffs and the potential for increased costs. The video also covers investment strategies, emphasizing the importance of considering financial leverage, cyclicality, and business quality in the current economic climate.

What is a potential consequence of increased trade tensions and tariffs on the global economy?

• Stronger currency values

• Increased global GDP growth

• Higher corporate earnings

• Higher input costs and lower demand

How might larger companies like Walmart respond to increased tariffs?

• By increasing their product prices

• By reducing their workforce

• By halting production

• By passing costs to consumers

What type of companies are likely to fare better during a trade war?

• Companies with high financial leverage

• Companies selling commoditized products

• Companies with high value-added products and competitive positions

• Small retailers and exporters

What factors should be considered in an investment strategy during economic uncertainty?

• Focusing solely on high-risk investments

• Ignoring business quality

• Cyclicality, business quality, and valuation

• Only financial leverage

Why might some companies not be attractive for investment despite high financial leverage?

• Because of low cyclicality

• Due to unattractive valuations

• Because of high market demand

• Due to strong business models