Wow after a rather quiet period on the markets where everything was heading upwards investors are being reminded that markets will do what they want to do, not what we may wish to do.
What can I say about Donald Trump that already been said (mostly by himself) except the US billionaire may have yet another achievement against his name as the guy who sent world stock markets into a spiral. Is that a bad thing? yes and no the market has to crash some time. That is what the market does but at least this time we have a reason and we can see it coming. The worst type of crash is when they come out of nowhere and are only obvious after the event. You might have heard of the term Black Swan. Rarely seen but you know they are out there.
Anyway what’s the big deal if Trump gets in? good question no one really knows, I suspect it wont be as bad as the market wants us to believe a bit like Brexit. A mad panic before everyone settles down and realizes life goes on.
If Trump does get in I can see a slowing down in the US economy if he pushes through his increased tariffs because as much as he might say he’s a great deal maker no country will allow US a free ride on tariffs. If the US puts them on so will every country it trades with. This is see exports slowing out of the US. So while he might prop up domestic manufacturing he will damage other parts of the economy.
Some economist believe the reduced trade with Europe may send them back into recession considering they are experiencing week growth as it is. In my opinion this is a real possibility but of course Trump needs to get any changes through the US congress which will not be an easy task.
So where does that leave us investors in the ASX? good question. Look back at history the higher multiple growth stocks should come back to earth on the worry and may prove to be where the bargains lay. As we have seen flows in safe havens such as gold has begun and should continue.
Is a Trump presidency the end of the world? not really it may upset the market for a while but then life will go back to normal as it always does. I am sitting and waiting hope some great companies go on special if panic sets in.
Disclosure
All of the above are my own ideas and do not constitute investment advice. I will be totally honest I do not know what will happen and I believe no one else does, but I do agree with Warren Buffet betting against the US in the long term has proven to be a bad bet.
