Donald Trump, Man of the People…

Donald Trump isn’t officially President yet, but he’s picked up the game of politics pretty quickly.

He and his team will shun the annual hot air fest that gets underway this week in the Swiss ski resort town of Davos. This is where global financial elites get together each year to discuss the world’s problems…and do nothing about it.

Trump, who campaigned on a platform of anti-elitism, has wisely decided not to be a part of the annual charade.

Instead, he’s been busy appointing family members and billionaire investor friends to key advisory positions…positions that don’t require them to divest their financial interests.

Oh, and Trump’s not divesting his assets either. They will go into a ‘blind trust’, to be managed by his sons. Nor is he going to release details of his taxes.

When asked if was going to release his tax returns so the public could see, he replied, ‘No, I don’t think so. I won.

He might not identify with the elites for political expediency, but he sure knows how to emulate them.

Since Watergate, it’s been standard practice for US Presidents to make their tax affairs public. In Trumps’ case (given his extensive business interests) it’s even more important his tax affairs are public knowledge. It allows people to see whether (or by how much) he’s using the Presidency to enhance his own wealth.

As you can see from the quote below, Trump has the art of modern political discourse down pat. That is, just say something stunningly ridiculous when you don’t want to answer a question.

As reported by Breitbart News (the former head of which is now Trumps’ ‘Chief Strategist’), a reporter asked Trump if he was going to release his tax returns like the last six Presidents:

“I don’t think they care at all, I don’t think they care, I think you care,” said Trump to cheers from the crowd. “First of all, you learn very little from a tax return. What you should do is go down to the federal elections and take a look at the numbers and actually people have learned a lot about my company and now they realized my company is much bigger, much more powerful than they ever thought. We’re in many many countries and I’m very proud of it.”


He’s probably got a point though. Trump’s tax returns are so doctored you would indeed learn very little from them. So if you want to learn about Trump’s business empire, just toddle off down to the ‘federal elections’ and peruse the numbers for yourself.

Next question!

The farce of politics continues to grow with each year. What entertainment!

You have to wonder though if this will be some sort of swansong for conservative policies and politics. Clinton won the popular vote, but not the ‘electoral college’.

Trump’s low tax, low regulation, every man for himself Presidency will likely see wealth congregate at the top even more so than under Obama. The ‘urban elites’ will view this as ‘unfair’, which could drive a greater vote for income distribution (read socialist) policies in the future.

Remember, Trump’s victory came from the ‘heartland’. It was driven by those not living on the coasts and not influenced by a ‘liberal’, Trump-hating media. Older voters who grew up in an America that celebrated the self-made man and encouraged risk taking were the predominant Trump supporters.

And Trump — self-made with the considerable help of US taxpayers — took full advantage of this.

But how long will this constituency be a political force in the US?

In the age of the central banker, maybe not that much longer. Easy money has ushered in an era of asymmetric risk taking. When you’re too big to fail, there is little downside and massive upside. And when ‘too big to fail’ is an ingrained policy, the effects trickle down.

Everyone wants something for nothing. Everyone wants a version of the Greenspan/Bernanke/Yellen put. Trump’s team, from what I can tell, isn’t about that.

As Trump and his team impose their ideology on the US over the next four years, it will likely create a lot of wealth. Lower taxes and lower regulations WILL translate into genuine wealth creation. There will be much less need for a central bank ‘put’, which is why interest rates will rise during Trump’s Presidency without blowing up the stock market.

Trump’s more free market ideology is 180 degrees opposite to Obama’s. The effects of this change will be positive, and may be enough to get him another four years in office.

This will take us to the end of 2025. But after eight years of a version of 19th century capitalism, the world will probably be ready to lurch back to a ‘kinder’, more interventionist government. The socialist world improvers will be back with a vengeance.

It reminds me of a quote by French playwright Moliere:

It is a folly second to none; to try to improve the world.

But what would a playwright know!

The bottom line is that under a Trump presidency, your super account is likely to do pretty well. I know stocks are overvalued already and bonds are in a bubble. Everyone knows that!

But if inflation picks up and central banks hold nominal rates below the rate of inflation (which they will) REAL interest rates will stay low to negative for a long time. In that environment, stock markets will continue to attract capital.

Index funds won’t do as well as good fund managers who ignore index weightings. A large chunk of the money going into the market these days is simply going into index funds. This pushes up the largest stocks and contributes to the ‘overvaluation’ of the market.

But not everything is overvalued. And that’s where the opportunities are.

And of course there are the small-caps. Investors have shunned this sector lately in favour of the blue chips. But in an improving economy, small-caps tend to do better. If you want to get a start in the small-cap space, click here.


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Greg Canavan is a Feature Editor at Money Morning and Head of Research at Fat Tail Investment Research.

He likes to promote a seemingly weird investment philosophy based on the old adage that ‘ignorance is bliss’.

That is, investing in the Information Age means you have all the information you need at your fingertips. But how useful is this information? Much of it is noise and serves to confuse, rather than inform, investors.

And, through the process of confirmation bias, you tend to read what you already agree with. As a result, you often only think you know that you know what is going on. But, the fact is, you really don’t know. No one does. The world is far too complex to understand.

When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases.

Greg puts this philosophy into action as the Editor of Crisis & Opportunity. As the name suggests, Greg sees opportunity in a crisis. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines traditional valuation techniques with charting analysis.

Read correctly, a chart contains all the information you need. It contains no opinions or emotion. Combine that with traditional stock analysis and you have a robust stock-selection strategy.

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