Impact of Political Risk (Trump) on your Investment Performance

Do you see any political risk to your investment performance? This given the fact that the US by now make up 70% of the MSCI World, and as it becomes more and more apparent that Donald Trump (if elected) would introduce quite a few material changes to the political landscape both within the US and beyond.

This topic is not about Trump or whether we like his politics / what we think of it. This is solely a question on whether you see any risk to your investment. These risks may as well materialize if e.g. Biden was ellected and there was some political unrest resulting out of it.

Last time Trump was postive for stocks.

I expect this time it would be very good for my portfolio.

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Same here, while the person and social politics is more than questionable in my eyes. There is no doubt that Trump is looking to make money and his supporters also highly benefit from a stock market rally. If anything I would rather consider limiting my emerging markets/RoW exposer (which I will not re-consider). Beside that there is really not much of an alternative to the US for now.

I share your stone cold cynicism/pragmatism(?). Guy is an asshole, racist, sexist, possible sex offender, crook, populist, immoral but if he’s over there and I’m over here, and him being there makes money for my portfolio I’ll take it. People get the leaders they deserve, after all, and the US’s election system is weird AF but it is what it is.

To me the main risk of Trump is the constant deterioration of the US democracy that he in a significant part caused. His actions are very dangerous on this aspect and I’m not sure there will be a way back if he gets another 4 years mandate. Stock market dominated by a semi-autoritarian country would be a novelty.

He is old, not very far from death.
He probably doesn’t care about the US economy in 20 years. It is not really clear to me what he really wants,

Also, last time Trump was economically-wise ok, but not excellent. He governed in a very positive period for the US economy and still lost a lot of international influence. A posteriori, I would have expected the US economy to grow more in that period, or at least to put more solid foundations to it.

Having said that, I don’t have a precise idea or plan. Any contribution is appreciated.

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I see many risks to my portfolio deriving from the way the US tend to focus on their own interests and consider foreign assets as their assets. However, Trump being reelected is a zero chance of occurring in my book.

Not everyone shares my point of view and several of my US acquaintances consider Trump as the favorite (to their dismay). My take is that the narrative from the media paint a picture that benefits their sales and polls are wildly inaccurate. Votations and Elections since 2022 show that abortion rights are a winning issue for Democrats and I don’t see that changing since November.

S&P500 with Obama > S&P500 with Trump :wink:

Thats exactly my concern. Trump himself probably won’t be a big problem but I see a risk that the US democracy turns into something strange. Either something close to a dictatorship or probably a civil war like situation. This trend will probably continue no matter who was elected, and even after both of them have passed away. This is not just a trend related to a person but a structural development I feel…

Yet, all emotions aside. Not sure if that was a problem for my investments or not. Clearly, I would probably not want to emmigrate the USA but… investment wise, will that become a problem? I simply don’t know.

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US always acts in its self interest. Even though it might not look like that in media, every move nationally or internationally is for the better economical prosperity of US.

I think the main problem would not be US investments but non-US investments. Specially European companies.

If Trump decides to move out of NATO, this will cause more defence spending in EU and an uncertain security environment. Now Europe is more dependent on US for energy as well. This can also be a risk with Trump and protectionism agenda.

If Trump is elected and obliges Ukraine to sign a truce and concede territory to Russia like he has implied their might be an immediate gain to the global economy.

The long term consequences of this and a perceived weakening of NATO are scary.

We can never know and I focus on quality stocks which are likely to have a good outcome.

I don’t think reducing exposure to companies with global businesses which happen to have their primary stock market listing in the US is a good protection.

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In my opinion this is all pandering to people who can’t tell between Austria and Australia. I don’t think Trump will touch NATO. Trump is most likely in Putin’s pocket, and the target audience is a cross-section of religious fundamentalists/conspiracy theorists/far right and left extremists and other such bottom-feeding trash. They are not many but can be a problem, as we saw with the Capitol riot. In the end Trump will have 4 years, if he wins, I still trust the checks and balances of the US democracy in the long term.

NATO has said it will back Ukraine, so if he obliges Ukraine to concede territory and sign a truce then “Russia wins” and deterrent of NATO is significantly weakened… more trouble ahead

We’ve veered far from topic. NATO exists to protect NATO members, that hasn’t been checked yet, let’s hope it never is.

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Maybe he’ll want to broker a peace deal that ends the war and delivery a clear domestic victory as well as being able to talk about how much money he saves by stopping the war and not paying for stuff.

This will be bad for Ukraine as he has not much leverage over Russia but can easily force Ukriane to concede by withholding support (both equipment and intelligence). This risk is why some efforts were made to investigate how to ‘Trump-proof’ funds and NATO operations.

Talking about content (which was not my intent here as I aimed to focus on the investment risk). But did anyone of you ever consider that Trump would end the War in 1 day, but different than how we think he would do?

Considering how unpredictable he was, he came from the corporate world and likes simple solutions. I see a risk that he, in his first day, called up Vlad and simply told him that:

  • Russia had 24 hours to retreat to the pre-2020 lines
  • The US would veto any war criminal cases, sanctions and, as required, offer political asylum
  • The US would bully Ukraine to:
    • declare neutrality and that it shall never join any military defense pact (like Nato)
    • accepting a dual-lingual system (Ukrainian and Russian)
    • accept local budgetary autonomy in the east (with restricted powers)
    • run re-elections whereas no member of the current government nor army leadership was allowed
  • The US would threaten Russia that, post these 24 hours
    • the US would defend Ukraine’s soil back to the pre '22 lines
    • the US would use its full range of powers achieve such (including ABC weapons)

This would either kill us all, or end the War…

You’re missing the point of “what’s in it for Vlad?

Language facilities and budgetary autonomy? That won’t suffice. Russia won’t be retreating to pre-2020 lines, particularly not from the annexed territories of Donetsk and Luhansk.

Also, the credibility of the US using “its full range of powers” is questionable. First, as you say, that’d be very expensive - and Trump is a businessman that boasts himself on making peaceful deals that save money.

Second, at that point, there is a considerable likelihood of Russia forging a military alliance with China as a counterweight to the US or NATO.

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Of course. Said so multiple times.

That said, Trump turning the US into an (semi-) authoritarian state or them turning into civil unrest isn’t necessarily bad from a short- to mid-term investment perspective.

On the other hand, Trump may very well amp up the pressure on China, downright to an outright trade war. And who knows how Trump, being short-fused as he is, might wage such war and what measures he may enact. This can be really bad for our investments.

Even Donald Trump wouldn’t know what he would do. It’s very easy to post on instagram or twitter. Doing something in reality is very difficult thing

Time will tell what happens. But somehow I feel that Donald Trump would not win. When he won it was a surprise , such things don’t happen again and again.

I’m not sure it was such a surprise in the U.S.

I feel we (at least many in Europe) are again anticipating that he’s going to lose - and may be in for such a surprise again.