Tag Archives: US election

Stock markets predicted the U.S. election

By Dale Roberts, Cutthecrapinvesting

Special to the Financial Independence Hub

What else could we write about? The news and stock market news and social media was just swamped with election fever and fervour. Yes the elections in the US stole the spotlight. There was not much light left for any other topic. And election predictions were everywhere. The predictions mostly got it right as they also got it wrong. The stock markets predicted the US election outcome. But there was certainly no massive Democratic (blue wave) as had been predicted by many pollsters.

Image by Tumisu from Pixabay

The US stock market has a very good record of predicting US presidential election outcomes. Since World War II, the stock market has predicted the outcome 88% of the time. That record just improved as US stocks (the S&P 500) predicted a Joe Biden victory.

As I had offered in my weekly MoneySense column

… when the S&P 500 fell in the three months leading up to the November vote during a presidential election year, the incumbent president or party of the outgoing president has lost the election

As the political sayin’ goes …

It’s the economy stupid.

And in 2020 another global event played into that narrative …

It’s the pandemic stupid.

And certainly those two events are connected; the pandemic killed the economy.

Related post: How does the pandemic end? With a cold.

The stock markets also cheered the election

It appeared that the stock markets also found or looked for any reason to embrace the election, coming and going. The markets offered generous gains on Tuesday (election day) and then the gains continued throughout the week.

From this CNBC post

Despite the uncertainty around the presidential vote, Wall Street notched its best weekly performance since April. The S&P 500 and Nasdaq jumped 7.3% and 9%, respectively, for the week. The Dow rose 6.9% this week. The S&P 500 also posted its biggest election week gain since 1932. Continue Reading…

Should I change my investments during an election?

LowrieFinancial.com
By Steve Lowrie, CFA
Special to the Financial Independence Hub
Back during the Clinton/Trump U.S. presidential election four years ago, I ended up fielding a lot of questions from investors of all political bents. Many investors wondered whether they should adjust their portfolio in response to the change of the guards. At the time, I had this to say: 
  • Post pubBack during the Clinton/Trump U.S. presidential election four years ago, I ended up fielding a lot of questions from investors of all political bents. Many investors wondered whether they should adjust their portfolio in response to the change of the guards. At the time, I had this to say: 

“If you want to skip reading my more detailed explanation, the answer is: No. Even when political news is strongly felt, there will likely never be a good time to shift your investments — neither in reaction nor as a defence. First, no matter how certain one or another outcome may seem, how the market is going to respond to the news remains essentially unknown. Second, by the time you’ve heard the news, it’s already priced into the market anyway.”

Fast-forward to 2020. To say the least, a few things have changed!  But my advice remains the same: From one election to the next, other factors have exhibited a far greater impact on investment returns than which person or party holds the U.S. presidency. Whether leadership is more or less conservative, largely efficient markets have usually figured out a way to shift and grow, either way.

As we can see in this interactive chart from Dimensional Fund Advisors, these results are well-documented. They also make a lot of sense, given something called “stage-one and stage-two thinking.”

Thinking in Stages

Stage-one and stage-two thinking are terms popularized by economist Thomas Sowell in his book, “Applied Economics: Thinking Beyond Stage One.” Basically, before acting on an event’s initial (stage one) anticipated results, it’s best to engage in stage-two thinking, by first asking a very simple question:

“And then what will happen?”

By asking this question again and again, you can more objectively consider what Sowell refers to as the “long-run repercussions to decisions and policies.”

Who will next occupy the various seats of power around the globe, and what might the results be? Stage-two thinking helps us see past the usual proliferation of stage-one predictions that call for anything from financial ruin to unprecedented prosperity.

As financial author Larry Swedroe describes in a US News & World Report interview, “Stage one thinking occurs when something bad happens, you catastrophize and assume things will continue to get worse … Stage two thinking can help you move beyond catastrophizing … [so you can] consider why everything may not be as bad as it seems. Think about previous similar circumstances to disprove your catastrophic fears.”

Timeles lessons in terminal uncertainty

In the 2020 U.S. presidential race, we’re seeing prime examples of both dire and exuberant financial forecasts, presumably premised on who wins the election. The truth is, nobody has a clue what all the combined market-moving forces have in store for us in the near term, because nobody can know the answer to Sowell’s convoluted market-moving question: And then what will happen? Continue Reading…

Book Review: 12 takeaways from Michael Cohen’s Trump book, Disloyal

There are of course a glut of books about Donald Trump, especially now we’re fewer than two months away from the U.S. election. We have previously looked at several of these from an investment point of view, and most recently Mary Trump’s book, Too Much and Never Enough.

On the weekend I read Michael Cohen’s Disloyal, which — like Mary Trump’s book — provides the kind of insider perspective that outsider journalists and authors can’t quite match. Cohen spent a decade as Donald Trump’s personal lawyer and “fixer” and as he says in the book, “I know where the skeletons are buried, because I helped bury them.”

In its review this week, the Washington Post is a bit harsh on Cohen but I found the book to be among the most insightful I have read about Trump: certainly more enlightening than John Bolton’s snoozer, or some of the early journalistic books like Michael Wolff’s Fire & Fury.

Below are a dozen takeaways that provide either insights not before quite articulated, or which seem to bear repeating. While much of what follows may be known or hinted at it in earlier books and journalistic investigations, Cohen wraps it all up with his ten years of close observance of Trump as he evolved from real estate hustler to Reality Show “star” and now his turn as the Reality TV president.

Clearly, Cohen views Trump as a purely transactional beast who cares little for anything but his own hide and possibly his close family members. He doesn’t come out and say it explicitly but my own view of Trump is that he epitomizes the single-minded pursuit of the four goals cherished by many in this secular society: Money, Power, Sex and Fame. And give him credit for this if nothing else: he certainly has attained copious quantities of all four.

1.) Motivation to run in the first place was as a “lark and a PR stunt.”

Trump, largely at Cohen’s instigation, initially decided to run for president because “it would be cool” and as “a lark and a P.R. stunt.” Or as Cohen has famously said, the presidency would prove to be “the greatest infomercial in the history of politics.” Not exactly noble motivations and there’s not a hint of even pretending it was ever about “public service.” Even if Trump’s team thinks he deserves the Noble Prize (which his team infamously misspelled the other day, when the correct spelling of course is “Nobel,” after Alfred Nobel.)

2.) What’s with the Putin obsession?

Trump’s fascination for Russia’s Vladimir Putin is based on his perception that Putin is also the richest man in the world, and therefore hugely influential. He also serves as a model for the “dictator for life” aspiration Trump clearly harbours. And, Cohen insists that should he lose the November election, he will try to find a way not to leave.

3.) “a cheat, a liar, a fraud, a bully, a racist, a predator, a con man.”   

No surprise here on this list of character traits. From page 15 of the e-book I read on SCRIBD:

“…. I bore witness to the real man, in strip clubs, shady business meetings, and in the unguarded moments when he revealed who he really was: a cheat, a liar, a fraud, a bully, a racist, a predator, a con man.”

It’s been previously reported how Trump has repeatedly stiffed contractors but Cohen cites several particular examples, including even those that backfired: like when he tried to welch on one of those famous $130,000 porn star payoffs covered by the tabloid National Enquirer.

4.) Pathological lying and baseless smears

The dirty tricks and pathological lying will continue. Cohen nicely recaps how the birtherism lie about Barack Obama originated, which first propelled Trump to media prominence. Similarly, he recaps the shameful smears that let Trump eliminate his Republican rivals in 2015-2016, ending with the smear about Ted Cruz’s father’s alleged (and ridiculous) role in the assassination of JFK.

5.) Sexual allegations

There’s plenty of salacious material about Trump’s sexual predator inclinations, both as the owner of beauty pageants and various ogling incidents, including ones about Cohen’s own daughter on a tennis court. That same daughter declared soon after Trump’s run was announced that he “wasn’t qualified” to become president. Out of the mouths of babes …. Continue Reading…

Connecting Dots

By John De Goey, CFP, CIM

Special to the Financial Independence Hub

The distinction between solid analysis and wonky forecasts can be tiny.  As a Portfolio Manager who has spent more than his fair share of time dealing with the media, I am highly mindful of the need for the fifth estate to look for controversy as clickbait.  As the saying goes, opinions are like noses – everybody has one.  The question this begs is “just how credible are the opinions we’re hearing these days”?

Theme 1: Worst is over for Covid-19 storm

There are two themes that I have been hearing a fair bit these days.  The dominant (but by no means universally-held) view in the financial media seems to be the storm has passed, the worst is over, and markets have already resumed an upward trajectory.  The other theme is that, with protests throughout the U.S., and increased sensitivity to Black Lives Matter, a massive bout of unemployment and record-breaking outbreaks of COVID-19, Donald Trump’s chances of re-election are teetering between slim and none.

Theme 2: If Biden wins, expect scaleback of Trump tax cuts

What I find interesting is that so few commentators have taken the time to link those two presumptive trends.  I say that because there’s a strong first-derivative consensus that should Joe Biden become President of the U.S., he will almost certainly repeal or at least significantly scale back the Trump tax cuts – and likely institute a wealth tax on the ultra-rich to boot.  If those things happen, pretty much everyone thinks it’ll be bad for the American stock market.

My question, therefore, is: “how do so many intelligent, forward-looking people think we can have strong capital markets when it looks increasingly probable that Biden will win in November?”  I have gone on record a number of times to say I think markets are dangerously overvalued.  That remains my position.  What is adding to my concern in July, 2020, is that we’re less than four months away for a Presidential election and the presumptive Democratic nominee is toying with a double-digit lead in the polls… and that no serious commentator thinks the American economy will not take a hit if the lead translates into a victory.  My sense, therefore, is that a number of financial commentators are opining that WANT Trump to win even though most of them don’t think he’ll be able to pull it off.  Analysts seem to be talking with their hearts; not their heads.

John De Goey, CIM, CFP, FP Canada™ Fellow, is a Portfolio Manager with Winnipeg-based Wellington-Altus Private Wealth Inc. John works from the Toronto office. This blog originally appeared on the firm’s “Newswire” site on July 10, 2020 and is republished on the Hub with permission.

Tempted to emigrate to Canada? Know the facts before renouncing US citizenship

Plane on the background flag of the United States. Travel concept.By Brent Soucie, CPA, CA, T.E. Wealth

Special to the Financial Independence Hub

In the past three days, many unhappy American voters — including many celebrities — have been crashing web sites containing information on how to emigrate to Canada. As a cross-border tax specialist, I’ve had my share of calls about this, so am republishing the following blog that originally appeared on T.E. Wealth’s website a year ago.  The posting caters to U.S. citizens already living in Canada, to U.S. citizens considering moving here, and to U.S. citizens considering renunciation of their U.S. citizenship.

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With all of the recent attention on the Foreign Account Tax Compliance Act (FATCA), I thought it would be a good time to address some of the issues surrounding our friends who reside here in Canada and hold U.S. citizenship – there are an estimated one million of you! You come from all walks of life. Some of you emigrated here shortly after birth, some moved here to start or grow your career(s), and some of you have lived here your entire lives, having derived your U.S. citizenship through your parents. In any case, FATCA impacts you and you need to know how. I’m often asked about the merits and drawbacks of keeping versus renouncing U.S. citizenship. Such is a deeply personal decision with potentially serious ramifications, so you need to make it with your eyes wide open. Here are some important things to consider.

Are you a U.S. citizen?

  • If you were born in the United States, you are a U.S. citizen – no exceptions
  • If you were born in Canada to two U.S. citizen parents, you are a U.S. citizen
  • If you were born in Canada with one U.S. citizen parent, your date of birth, as well as the amount of time your U.S. parent resided in the U.S., will determine whether or not you are a U.S. citizen

Facts about U.S. citizenship

  • It is illegal for U.S. citizens to enter or leave the U.S. without a valid U.S. passport (section 53.1)
  • Carrying U.S. citizenship offers several benefits, including protection while travelling abroad, consular services, access to the U.S. domestic job market, ease of travel to and from the U.S., and the right to vote in U.S. elections

Continue Reading…