It’s A Political Economy

We  are now 392 days till the 2020 election, and who will be inaugurated President in 2021?  The economy and the market have benefited from some of Trump’s policies; other policies… not so much.  Take trade.  Trump’s review of ways to limit American capital investment in China by restricting Chinese ADR listings in the US spooked the markets.  However, the SP500 is up nearly 38% since Trump’s election. So what does the future hold. In spite of the fundamentally sound economy my prediction is more volatility as the election approaches and politics get nasty.  We are already seeing buying volume dry up on the NASDAQ as selling continues to increase. Similar situations exist with the SP500 and DJI, but not as bad.  In fact the buying and selling behavior of the DJI almost looks normal.  The primary culprit in my opinion is the uncertain trade and tariff policy, the continuing trade war with China, and the slow down in the world economy.  Even if the American economy is okay many of the big companies we invest in make huge profits overseas. Expect those profits to be lower as the world economy slows down.  For some sectors we are already in an earnings recession.  On the bright side a down market presents many good buying opportunities.  Remember the old saying, “Buy low; Sell high!”