How to invest if Trump wins
After Saturday's attempted assassination attempt on former President Trump and President Biden's continuing challenges around the age issue, most prediction markets put a Trump victory at about 70% (though 538 favors Biden).
So, it's time to examine how Trump and his allies' explicitly stated policy positions and goals could affect alternative investing over the next several years.
Politicians campaign in poetry and govern in prose, so there's no guarantee all (or any) of these positions will happen, but it's the best we have for now.
I'm going to look at:
???? Macro Economy
Expect a rollercoaster ride for the U.S. economy if Trump wins in 2024. Policies ranging from trade wars to energy deregulation will stir the pot, creating short-term boosts in certain industries but potentially leading to long-term challenges and uncertainties. The interplay of immigration policies, trade tariffs, and energy production will be crucial in shaping the economic landscape.
Immigration Policies: Mass deportations and tighter immigration rules could shrink the labor force, particularly in sectors like agriculture, construction, and hospitality, which rely heavily on immigrant labor. While this reduction could lead to wage inflation and increased production costs, potentially creating labor shortages, it may also lead to higher wages for domestic workers, increasing disposable income and boosting consumer spending in certain areas (AP News).
Investment opportunities:
Trade Policies: Imposing tariffs could ignite trade wars, spike import costs, and drive inflation, causing disruptions across supply chains. These tariffs may lead to higher consumer prices, reducing disposable income and consumer spending. However, tariffs could incentivize domestic production, boosting local manufacturing and creating jobs (NY Times).
Investment opportunities:
Energy Policies: More oil drilling and reduced environmental regulations might offer short-term economic gains, especially for the fossil fuel industry. However, the long-term outlook could involve increased environmental degradation and higher future costs associated with climate change mitigation. Lower energy costs, on the other hand, could benefit industries with high energy consumption, reducing production costs and improving profitability (Reuters).
Investment opportunities:
Would you like to know more?
The New Geography of Jobs: Enrico Moretti. This book explores how the clustering of innovative industries affects local economies. It's relevant to your topic as it discusses how changes in immigration, trade, and industry concentration can impact different regions of the U.S., which is crucial when considering potential economic impacts of policy changes.
The New Map: Energy, Climate, and the Clash of Nations: Daniel Yergin. This book explores the geopolitics of energy, which is highly relevant to your discussion of energy policies. It provides context for understanding how changes in U.S. energy policy could affect global markets and international relations.
The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes: Zachary D. Carter. This book provides insights into Keynesian economics, which is particularly relevant when considering government interventions in the economy. It offers a historical perspective that can help understand potential impacts of trade wars and energy deregulation on the U.S. economy.
?? Venture capital and startups
VC investments and startups will need to buckle up for turbulent waters. Regulatory changes alongside economic uncertainties could both spark opportunities and pose risks, all depending on how policies shake out. Innovation hubs and tech sectors may face mixed fortunes as changes unfold.
Immigration Policies: Talent pools could dry up due to tighter immigration limits, impacting tech startups that rely on international talent. This may lead to higher hiring costs and reduced competitive advantages, while also fostering a strong local talent pool that could lead to higher wages for domestic tech workers (USA Today).
Investment opportunities:
Energy Policies: A favoring of fossil fuels over renewables may result in fewer VC dollars flowing into clean tech sectors. Conversely, startups focused on fossil fuel technologies could see a surge in interest and investment. Deregulation and increased energy production could also lower energy costs, benefiting energy-intensive startups and sectors (Politico).
Investment opportunities:
Educational Funding Cuts: Cuts to education budgets could mean fewer opportunities for EdTech startups, but increased privatization could open up opportunities for companies offering innovative educational solutions and private funding sources (NBC News).
Investment opportunities:
Key Startups to Watch:
Would you like to know more?
VC: An American History: Tom Nicholas. This book traces the evolution of venture capital in the United States, highlighting pivotal moments and key figures. It's essential for understanding the historical context of current venture capital practices.
Immigration Policy and Entrepreneurs' Choice of Startup Location: This study delves into how immigration policies shape where entrepreneurs decide to start their businesses. It provides data-driven insights into the significant role that immigration plays in the entrepreneurial ecosystem.
Immigrant Entrepreneurs and Billion-Dollar Startups: This policy brief explores the contribution of immigrant entrepreneurs to the U.S. economy, demonstrating their central role in creating highly successful startups. It underscores the critical need for supportive immigration policies.
Research: Why Immigrants Are More Likely to Become Entrepreneurs: This article explains the factors that make immigrants more likely to start businesses, including host-country effects and selective immigration policies. It is essential reading for understanding the unique entrepreneurial drive of immigrants.
Immigration Policy Levers for US Innovation and Startups: This book-length review provides strategies for leveraging immigration policies to enhance innovation and support startups in the U.S. It is crucial for policymakers and investors looking to understand the intersection of immigration and entrepreneurial success.
?? Real estate
The real estate sector will feel the ripple effects of Trump’s policies on immigration, trade, and energy. Prepare for shifts in demand, changes in property value, and shifts in regional economic landscapes. Investor sentiment and market stability will hinge on how these policies are implemented and perceived.
Immigration Policies: Lower immigration rates could bring down demand for urban residential properties, particularly in major cities with high immigrant populations. This reduction in demand could lead to falling home prices and lower rental yields, but less competition for housing may make it more affordable for domestic buyers, potentially stabilizing markets (AP News).
Investment opportunities:
Trade Policies: Industrial spaces may suffer as tariffs disrupt supply chains and shift manufacturing bases, leading to potential vacancies and declining rental rates in logistics and manufacturing hubs. However, a move towards domestic manufacturing could spur demand for industrial real estate in certain regions (NY Times).
Investment opportunities:
Energy Policies: Fossil fuel deregulation could boost demand for industrial properties related to energy extraction and production, particularly in states rich in natural resources. However, environmental degradation and policy instability could undermine long-term property values in affected areas. Lower energy costs could make certain properties more attractive (E&E News).
Investment opportunities:
Would you like to know more?
Real Estate Investment and Finance: Strategies, Structures, Decisions: David M. Geltner and Norman G. Miller. Geltner and Miller provide a comprehensive insight into strategies and decisions around real estate investments, making it useful for those interested in the economic factors affecting the sector.
Real Estate Economics: A Point-to-Point Handbook: Nicholas G. Pirounakis. This handbook introduces the main tools and concepts of real estate economics, making it a helpful resource for understanding how broader economic policy impacts real estate markets.
Emerging Market Real Estate Investment: David Parker. This book covers the complexities of investing in emerging markets, providing insights into supply chain shifts and localized manufacturing that are crucial for grasping the trade policy impacts on real estate.
?? Private equity and private credit
Private equity and credit markets will navigate through a storm of regulatory shifts, economic policies, and new market landscapes. Opportunities abound, but so do the risks. Decision-makers will need to be agile and adaptive to leverage the new environment effectively.
Trade Policies: Tariff impositions could sour the investment climate, especially in sectors dependent on global supply chains, such as manufacturing and retail. Companies facing higher costs due to tariffs might see reduced profitability, deterring private equity and credit investments. However, tariffs could encourage investments in local manufacturing, creating jobs and boosting domestic industries (NY Times).
Investment opportunities:
Healthcare Policies: Repealing the ACA without a backup plan could cause chaos in healthcare investments, with increased uncertainty around regulation and coverage. Private equity and credit firms invested in healthcare may face unpredictable earnings and operational risks. However, deregulation could lead to cost-cutting opportunities and increase profitability for healthcare providers (AP News).
Investment opportunities:
Energy Policies: Deregulation brings short-term gains for fossil fuels, prompting investments but leading to long-term sustainability issues. Private equity and credit markets might rush to capitalize on the deregulation, investing in energy projects with high immediate returns. However, future regulatory reversals and environmental risks could affect the long-term viability of these investments (E&E News).
Investment opportunities:
Would you like to know more?
Capital in the Twenty-First Century: Thomas Piketty. A seminal work on wealth inequality and economic policies, offering valuable insights for understanding the broader economic context influencing private equity and credit markets.
Means of Control: How the Hidden Alliance of Tech and Government Is Creating a New American Surveillance State: Byron Tau. This book delves into the collaboration between tech and government, examining the broader implications for private equity and credit markets within regulatory frameworks.
??? Wine, spirits, and art
This eclectic sector might witness both struggles and opportunities under Trump’s administration. Trade policies will particularly shake things up, affecting prices, supplies, and investment returns. Market dynamics will shift based on tariffs and regulatory changes, impacting luxury goods, imports, and collectible asset values.
Trade Policies: Tariffs on European imports could surge prices, limit selection, and curb demand, shifting focus to domestic producers. U.S. consumers might turn to American-made wines and spirits, boosting local industries but reducing the international diversity of products. Art imports could become more expensive, deterring collectors and reducing cross-border sales (NY Times).
Investment opportunities:
Would you like to know more?
Wine Wars: The Curse of the Blue Nun, the Miracle of Two Buck Chuck, and the Revenge of the Terroirists: Mike Veseth. This book explores the world wine market dynamics, perfect for deciphering how tariffs and regulatory changes may impact wine economics and investments.
Economics of Art and Culture: Bridger Mitchell. This book delves into the economic aspects of art and culture which can help in understanding the impact of trade policies on art investment and market shifts.
The Billionaire's Vinegar: The Mystery of the World's Most Expensive Bottle of Wine: Benjamin Wallace. A fascinating tale of high-stakes wine investment, offering insight into the lucrative market of collectible wines.