Trump appears to want to staff his administration with fewer normies, in addition to firing part of the civil service. He also wants to introduce a 60% tax on goods from China, something he apparently can do with a stroke of the pen. In addition to being inflationary, it’s not clear how much this would help US manufacturing, since it would be expected to lead to appreciation of the dollar. It certainly wouldn’t help exports given that a huge share of imports are in fact intermediary goods.
That said, I’d be more concerned about holding long term bonds than stocks, at least over the long term. I mean what’s the worst case scenario? There is a lot of ruin in a country, but worst case scenario would be Great Depression: I can’t see that happening. But hey, let’s look at the chart. I use annual data, figuring that the investor won’t be unlucky enough to buy at the daily high.
Yes, it would be decades before prices return to where they were in 1929. But if you had a 30 year horizon you were golden. Anyway, Trump’s tax cuts on the wealthy could just as easily spark a bull market. In fact, that’s much more likely I would think.
For more fun, here’s the stock market under Hitler. It did great until the Nazis decided that stocks would be prohibited from falling: they could only rise. Then it continued to not do badly, provided you could find someone to buy your holdings at the old prices. Which was impossible. Anyway, when price controls were released in 1949, German stocks dropped 90%. By then the Nazis were out of power. But at least you could sell what you owned.
Just to make sure: are we arguing whether gun ownership, and presenting the fact of gun ownership in a non-negative light, carries a tacit message in and of itself that gun ownership is morally neutral or good, thus reflecting on the policies that person would take?
(And why the hell did autocorrect want so badly to make that one word “Carrie’s”?)
Well first of all, you should be investing based on available data, not your “beliefs” or the opinions of people on a message board with dubious insight into the financial markets.
Really the question is whether you believe Trump’s fascist takeover or Harris’ leftist takeover will:
a) cause the largest economy in the world (almost as large as the next 4 nations combined) to suddenly collapse
b) induce the largest stock exchanges in the world (NYSE and NASDAQ) to collapse
c) somehow render a significant portion of the 500 large companies that comprise the S&P 500 permanently unprofitable.
That is not to say that the market doesn’t go up and down. But you shouldn’t really be looking at the markets like “oh is this or that event going to cause the market to dip?”
Just do what I do and throw a bunch of money in an index fund and don’t look at it for decades.
If you want to put money into individual stocks, you can also do what I do is find companies that look like they will be good businesses for the next several decades and then don’t look at them for those decades.
Also before anyone references the 2008 financial crisis, that was a systematic problem of Wall Street’s own making over many years which actually had little to nothing to do with the stock market.
The Dow Jones Industrial Average went from about 19,900 when Trump was inaugurated in 2021, to about 31,200 when he left office. There was a big stock market dip in Feb.- March 2020, but the the Dow had recovered to above that level by the time Biden came in (it’s over 42,000 now).
People here are acting as if Trump will be running the entire economy by himself, or at least will have such devoted and deluded cult members that every word salad that comes out of his mouth will immediately become their singular goal.
I have more worries that Trump’s minions will successfully curb or curtail freedoms than they will destroy the economy. The market is far larger than the government and intensely committed to its perpetuation. Herbert Hoover did not cause the Great Depression, although his policies did little to ameliorate its effects. Reagan did not cause the stock market crash of 1987, although his policies helped those worst affected not at all. Bush II did not cause the Great Recession, although his policies did an inadequate job of protecting the victims. Notice the similarities?
The most likely scenario in November is that Congress will switch: the Senate will turn Republican and the House Democratic. That alone will quash the more insane policies. Even in the worst case scenario of the Republicans retaining the House, not much in the way of economic spoiler policies will pass. Does everybody forget that most people in Congress get much if not most of their funding from Big Somethings?
You can argue that he will issue Executive Orders. True, EOs can be dangerous, but they are also limited in scope. The Senate for sure and many in the House as well will rebel if Trump tries to run the country by leapfrogging them.
My advice is to stop doomscrolling. Business interests may have lost their century-long grip on the Republican Party, but they are still bigger than the government. I refer everyone to the case of Godzilla v. Bambi (1969).
FWIW, I’ve decided, for reasons mentioned by both my OP and replies, that I’m just going to shove the money into my Vanguard index fund as planned and be done with it. Like I said, I think I can ride out anything short of the fall of American democracy and concentration camps, and the money won’t matter if it does, so what the hell.
I was going to post something else, but this is what I’d suggest. I think your OP was sufficiently answered in the first paragraph of the first response.
Can you afford to lose it? How long can you keep it in the game? Your personality? The latter being the most important. The magic of compounding interest only works if you never touch it. Have a range of realistic outcomes and don’t move the goalposts if things go well.
Answering purely financially, I’d wager the fall of American Democracy should not affect this type of stock long-term. Likely a pro-business plutocracy/rigged “democracy” for appearances would replace it in the short-term (decades / your time-horizon). This is probably a good GD question, though.
The above all being true - I agree with all of it - I wouldn’t personally say that it’s quite that simple.
First, let’s note that Trump wasn’t a Republican. (I’d put him down as a Dixiecrat who got disaffected with the Democratic party in the 70s and floated around in a political void until Obama came onto the scene and re-energized the Dixiecrat homeland.)
But, running as and with Republicans, and stuck with a Republican House, Senate, and Supreme Court, Trump took on a bunch of cabinet members from GW Bush legacy administration and over the next several years, one by one, fired them or (more often) drove them to quit rather than be associated with someone with an agenda so foreign to their own.
But the market always reacted to Trump as though he was a traditional Republican - here to cut taxes, remove regulations, open up more opportunities for global business, etc. And, in general, that’s what he did because that’s who he had in his cabinet, pushing him every day. And, when Trump told them to do something stupid, they either figured out ways to soften it, find a more reasonable angle on it, or they just greenlit it, without any advance prep, so it could get the headlines that Trump wanted and then flail itself out into nothingness through mismanagement and lack of planning.
By the fourth year of the administration, the percentage of Senate approved cabinet members was perilously low and that’s where we started to see coordination between his hand-picks for things like the Fake Electors plot. Truly questionable and corrupt s***.
By 2025, it still might be a traditional Republican Senate. But the House Republicans will be Trump’s, he’ll have the apparatus of the RNC on his side, plus the entire rightwing media organ. To the extent that Trump even bothers with asking for Senate approval of his cabinet, I’d expect him to either forgo the task at all or just tell everyone to report to some other person instead, and sideline the Senate-approved people. Ultimately, there’s a far greater risk of some truly unfortunate acts.
Trump won’t, to be sure, have any real control over the Fed. He can’t create law. But he does control the US military and that means that means that he is able to choose whether to support or abandon Ukraine, Taiwan, Montenegro, Georgia, etc. And without people like John Bolton, HR McMaster, Gary Cohn, etc. to step in and force the issue, it’s just a matter of time until Trump signals that he’s going to turn a blind eye to anything else that happens in the world.
Taiwan matters to the American economy and the American every day. It’s not Montenegro.
And while Congress can’t force Trump to send troops to a place, they can force sanctions, tariffs, etc. on any nation that’s acting belligerently. The manufacturing power of China matters a whole whole lot to the American economy and the American every day. It’s one thing to throw a few angry words back and forth, slap a few fake tariff on Chinese goods, etc. and another to really do things that would impact US supply lines - which Congress might see fit to do if there was an attack on Taiwan.
The genuine and real impact of a military posture of, “Do what the f’ you want, we don’t care.” Isn’t tiny.
That’s where the time portion of the equation comes in. Leaving out if the sky really does fall, is this a long term or short term investment? If you need the money back within the next few years and are worried about uncertainty and volatility in the market, don’t invest in stocks. If this is a 30 year investment then you don’t have to worry so much about short term volatility
This. We have already had a Trump presidency. We have an idea what the economy will do. Why are people thinking it will be radically different this time? The stock market was generally great during his four years (S&P up 28% in 2017, -4% in 2018, +31% in 2019, and +18% in 2020). Nobody knows what the market will do, but thinking that Trump will somehow destroy our economy is foolish.
There is every reason to believe trump 2 will be very different from trump 1. And that it will be their intent for there to be a trump 3, 4, and 5 to follow.
Assuming it’ll be just like last time but with no COVID is foolish.
Based on nearly every comment I’ve seen online from a Trump supporter, I’d swear that we haven’t ever had the man as President. Pretty soon here we’ll have a Wall, the FBI director won’t be some Deep State Liberal appointee, our budgets will stop growing year on year, etc.
Really? Why don’t you start with telling me at least couple of those reasons. Because it seems like everything that is being said now was also said prior to him being elected the LAST time. Look, the guy did a poor job, he tried to overstay his welcome, but cooler heads prevailed and he didn’t bring about civil war OR start WW3. I think, if he gets elected, we can expect pretty much the same actually. I have every confidence that this country can survive him.
Project 2025 is one reason why things might be different in a second Trump administration. Thousands of civil servants might be replaced with political loyalists.
Project 2025 wants to weaken the Fed’s independence. If Trump raises tariffs by 10%, we would expect a simultaneous strengthening of the dollar, limiting improvement in the trade deficit. Since tariffs act as a tax on exports (as well as imports) the trade deficit could get worse.
What do authoritarians do when their pet project runs into wholly anticipated problems? They double down of course. I’d expect Trump to blame the Fed.
Chair Powell’s job comes up for renewal during the next 4 years. I’d expect Trump to appoint someone else. If he appoints someone like Peter Navarro - which I certainly cannot rule out - as well as other Trumpists to the Board of Governors, then we can expect the Fed to be even more complaint than it was under Chairman Burns, when inflation hit double digits.
Rome wasn’t burnt in a day: I expect inflation in 2025 to be moderate under either administration, just as it is today.
Just to demonstrate a bit of the bias on this board, I didn’t see any mention on potential impact to the market if Harris gets elected and institutes her proposed tax on unrealized capital gains. I don’t think that’s likely, but it would definitely negatively impact the market.
Generally the saying “time in the market is better than timing the market” holds true. Meaning don’t try to guess the markets reaction to every bit of news.
