Are you waiting for the votes to be counted to make your money moves? How will this election and a potential regime change or not alter the landscape?
Disclaimer: This post is meant to be unbiased, non-political, and merely a look at the known facts and assumptions provided by candidates and history for informational purposes for investors.
The 2020 Presidential Election
This certainly sounds like one of the most controversial US presidential elections in the media. It could also prove to be one of the most over-hyped elections in US history as well.
Given all the extra excitement of this year, we may even have to wait a little longer than normal for the final outcome.
The big question most have is how the election of either candidate, Trump or Biden, will change things and what the best investments are.
We’ll avoid quoting any media statistics here due to the extreme polarity and bias across news outlets this year. Though if you really want to dig into the data, then you might enjoy looking at graphs and data from the Federal Reserve and other economic data compilers and lining those up with which political party was in power at the time.
It is also recommended that you look at each candidate’s campaign website to hear straight from them how they plan to raise or cut taxes and change regulations.
If you’ve been around since at least George Bush, then you will also have the personal experience of seeing trends associated with both parties and their overarching trend toward policy and regulations.
It is also worth mentioning that despite which candidate or party wins the presidency, much of their desired intentions can fall apart or fail to materialize due to poor execution, and lack of backing in legislating in the House and Senate. This normally means we see very real movement in the needle every four years. It may move slightly in one direction and is then countered by the next presidential term.
A Democrat Win
A Joe Biden and Democrat party win seems to carry the overarching themes of:
- High taxation
- More taxes
- More big government involvement
- More government subsidies
- A compression of entrepreneurial activity
- Less small business and investor friendly governance
A Republican Win
A Trump and Republican party win seems to carry the overarching themes of:
- Lower taxes
- Less government subsidies and help
- Promoting investing and new business creation
- Support for big businesses
- More debt creation
There are also clearly many moral and ethical differences between these parties and candidates and the direction rulings may take. However, we are purely focusing on the economic impact of the election for this article.
The Outcome for Investors
There may be small changes or trends that come with each of these candidates. These include the expansion or contraction of government subsidized housing, raising or lowering business and personal taxes, and whether we flip into a new optimistic bull run or see a continued bear market for the next four years.
However, we will always have to face regulatory changes, trends and fluctuations in these factors. You either have to just choose to roll with the punches and adapt and evolve as you go, or choose to invest in a way which allows you to win and enjoy consistent returns no matter who wins the next election and the one after that.
How do you do that?
Hybrid investing seems to be the answer. That means true diversification that facilitates consistency and confidence by balancing your portfolio. It limits downside risks of any negative changes from an election, while positioning you to benefit from the upsides as well.
An example would be investing in income producing rental properties, and diversifying tenants between subsidized units for which the government pays you rent each money, and market rate rentals to cash and corporate tenants who pay directly.
Having multiple strategies and asset types within one vehicle also helps. At NNG we do this by maintaining a lot of liquidity, and benefiting from cash flowing assets, and the ability to sell off assets for gains to keep overall returns steady. As a debt fund, we also provide our investors a straight return. Not roller coaster rides that depend on the next media headline and fake news post.
The biggest threat to investors is probably not which political party wins next. It is buying into the fear and hype and being conned into failing to take action and taking advantage of the opportunities on the table.
What will you invest in this week?
Find out more about investing in secured debt and real estate, go to NNG Capital Fund