Trump versus Clinton, Hillary versus the Donald. The insider versus the outsider, the chosen one against the bombastic one. Man oh man, this is gonna be a fun election for my American friends.
And Donald J. Trump is going to win.
Okay, I hear what all my regular readers are saying, all three of them. This is a blog about stocks, about the financial markets. This isn't a political soapbox. Why am I going on about the U.S. election?
Well I'll tell ya.
There's a reason Donald will win, and its the same reason why money losing companies are able to attract investors while printing off shares. Mr. Trump will be moving into the White House for the very same reasons that people put hard earned money into companies whose executives earn million dollar salaries and bonuses but never deliver long term shareholder value, sometimes for decades.
Why? Because people are stupid.
Please note, I said "People" not "Americans". The United States does not have a monopoly on stupidity. Canadians like myself need look no further than our largest city, the cosmopolitan and liberal bastion called Toronto, which elected crackhead Rob Ford as mayor.
Its a simple formula folks, you see it in politics and the public markets all the time. Just tell people what they want to hear and make sure you have a really simple solution to any problem, no matter how complex. All you have to do is sound strong and confident, even when you're talking outta your ass.
How it works in the public markets
You have some little beverage company that claims its going to compete with the Cokes, the Pepsi Colas the Nestles of the market. How? Easy, by merging with other little companies to bring about economies of scale and synergies, going after a small little niche segment. Just think about it, some little Pink Sheet traded OTC company will go from pennies to $10 so buy all you can while the PPS has only climbed to a buck or two and you'll be rich. And don't even think about who is selling, that doesn't matter.
In politics
How can the U.S. deal with illegal immigrants coming in from Mexico? Simple, just build a wall. Easy peasy lemon squeezey, just say it after me. Build a wall, build a wall....keep saying it until you understand that it can't fail. If you're still not convinced pump your hand and chant, and say it louder. BUILD A WALL, BUILD A WALL!!!
Confidence is key folks. If you start trying to sound intelligent and nuanced, you've already lost.
Now, with public companies we all know what happens. Reality sets in and the PPS crashes leaving investors wondering: "What the hell just happened"? But that's okay for the CEO and other insiders because the money has been raised. The salary and bonus checks will continue thanks to the stupidity of the investing public. And some are so stupid they'll refuse to admit they even made a mistake. They'll still love the CEO and will blame dark market forces like hedge funds and short sellers. They'll scream at message board "bashers" who were too dumb to buy a ticket to the promised land.
In politics its much the same.
Once Trump gets elected and the wall still isn't built or even started, it won't be his fault....it won't be because it was a really dumb idea. It will be because of his opponents who didn't see Donald's genius. When protectionism isolates the United States from the rest of the world and men and women are out of work, it won't be because voters put the wrong guy in the White House, it'll be because of American enemies.
Oh what might have been
It could have been a different election though. The Democrats could have gone with a better candidate. Instead they gift wrapped the nomination and handed it to Hillary Clinton. The former first lady, senator and secretary of state with the private server and bogus sniper fire story. The contradictory progressive who also says she's a moderate, once against same sex marriage and now in favor of it. Whiskey Tango Foxtrot???
Bernie Sanders would have offered a clear choice, old but dynamic Bernie knows how to do more than just talk the talk, he walks the walk. He talks racial justice and marched with MLK. Hillary talks about the glass ceiling and women's issues but laughs about getting a rapist off with time served. Bernie would have had a chance, but Hillary will inspire too many voters to stay home on election day. Some voters will hold their noses too long and won't be able to leave the house in November.
In any case it will make for great theater over the coming months. And for those who are dead set against a Trump presidency, take solace. This blog made one other recent political prediction, that Britains would vote to stay in the EU, and I got that one wrong. Maybe I'll be wrong again.
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