Trumped!

Scott,

I can’t believe the Americans could vote in such a loose cannon as Donald Trump. The experts are predicting that he will be an absolute disaster. The share market has been a rollercoaster and I am wondering what I should do with my shares, given that I am 10 years off retirement.

Beth

Hi Beth

There are many things we can learn from the US election, but the most important one is something I wrote a few weeks ago: experts are no better at predicting the future than my golden retriever, Buffett.

The experts predicted that Clinton had an 87 per cent chance of winning.

Wrong.

The experts also predicted that if Trump was able to pull off a miracle the share market would drop 13 per cent.

Wrong.

The US market has hit all-time highs this week. And now the media is going back to these so-called experts and asking them what happens next?!

And they say Donald Trump is crazy!

The truth is the election result has zero effect on where I am investing my money right now. Again, as I said a few weeks back, I just don’t think it matters who is in the White House in the short term, and in the long term compound interest takes care of itself.

However, I’m not surprised that the share market is hyped up because Trump is clearly pro-business (even though he’s not a pro at business himself):

First, he likes building things. And he has promised to embark on one of the biggest infrastructure spends in history.

Second, he’s not afraid of debt (as shown by his string of corporate bankruptcies), so I wouldn’t be surprised if he pushed things to the limit.

Third, he’s committed to dramatically slashing taxes in the most capitalistic country on earth. Like Ronald Reagan, he’s planning on a ‘trickle down’ approach -- allow rich people and companies to pay less tax and they’ll stimulate growth that will eventually trickle down to the workers. Or at least that’s the idea.

The final thing I’d say is this: the man lacks character. Whether it be the coach of a footy team or the CEO of a business, if you have a fundamentally flawed leader -- whose decisions are based on their own vanity and ego -- history has proven that it rarely works out well.

Still, I can’t control what goes on in the White House … the only thing I can control is what goes on in my house.

Scott