US presidential hopeful Donald Trump has saida lot of crazy things. Astonishingly, he may evenmean some of them.
All his talkabout building 2,000 mile long walls, deporting illegal immigrants (all 11 million of them) and banning Muslims from entering the US may have destroyed some peoples faith in America, but could he also destroy your investment portfolio?
We Will Survive
I dont give any credence to overheated talk about President Trump destroying the world if he wins in November.
Instead of destroying faith in the American political system he may, paradoxically, revive it, as the checks and balances swing into place and stop him from doing the siximpossible things he dreams up before breakfast. Congress isnt just going to roll over, especially since so many of his impossible ideasclash with Republican policy.
I expect tosee a more mollifyingcandidate Trump in the run-up to election day, as the Donald tries to look Presidential. ButI do still have some concerns.
Trump is popular because the US middle-classes are hurting, and they readily believe his claims that destructive free-trade deals and unfair competition from China are the reason. For some reason, they appear to believe thata billionaire real estate developer is the guyto stand up for the common man. Even if they dont believe that, they dont see anyone else trying.
Jaw-Jaw, Not Trade War
If Trumpwins in November it could herald a newera of protectionism, which wouldntdo the global economy or stock marketsany favours at all. Hehas talked of imposing import tariffs of as high as 35% and banningAmerican companies like Ford from building plants in Mexico, which would surelytrigger tit-for-tat retaliation from trading partners around the world. Hisanti-immigration platform could also hurt US growth by stemming the flow of legal as well as illegal immigrants, and that mightindirectly hurt our economy too.
Trump says his goal is a pro-business policy that rewards companies that invest in America, return to America, or stay and thrive in America. This is a concern for an open economy like the UKs, but as an investor you cannot afford to get too worried about it.
First, of course, Trump is not yet President. A lot could happen over the next few months. Also, populists are notoriously bad at governing. Many of the things he says he will do sound ridiculous and dangerous precisely because they are not actually do-able in practice.
Donald Ducks
Trump likes to trumpet himself as a dealmaker. His recent comments suggest that even he understands his limitations, and will quickly start cutting deals. The people who have most to fear from Donald Trump aresupporterswho have been promised the world, as they may be disappointed with what they actuallyget.
A protectionist President Trump could spring some nasty shocks, but perhaps the biggest surprise to his supporters will be how little he can actually do in practice. All his sound and fury may ultimately signify nothing. The US will survive, and so will your portfolio.
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