So you’ve decided to vote for Donald Trump. You think that Trump is going to Make America Great Again™ and that you’ll be winning so much you’ll be sick of winning. Laying aside whether you think you’re winning now, first ask yourself a few questions about how much your vote is going to cost you.
Do you have a 401(k) or IRA or other retirement plan? Do you have stocks or bonds or mutual funds? Do you have real estate investments? If the answer to these questions is “no,” then you’re either still in school, or you’re living in your parents’ basement, or you’re in trouble anyway because you haven’t set up a nest egg for your future.
In the latter case, your vote for Trump costs you nothing–in fact YOU are the voter Trump has targeted since 2012 when he decided to make his move into politics. Congratulations, you have the least to lose. Vote away (and you would anyway).
For the still-in-school and the parents’ basement crowd, you still have a lot of years to spend working, and you still have a lot to lose from a Trump presidency. So listen up.
Let me preface my remarks with the fact that if Trump becomes president, certain things will likely happen regardless of what Trump does in office. These things are governed by the financial markets and their response to a Trump win. They have nothing whatsoever to do with Trump’s deals, his “winning” or his negotiating skills. These things will happen because the markets react to facts and cold hard cash.
Therefore, your vote has a price, and it could be a very personal and costly price.
I know, you want to keep Hillary out of office. I do too. I would love to see her lose, but the opportunity to replace her with a cheaper option is fairly well behind us. So if you want to know exactly how much you’re going to pay for the privilege of a Trump presidency, here’s the run down.
We will start with what the billionaires say about a Trump win. Billionaires have a lot to lose, and spend a lot of time trying not to lose it. So what billionaires do is very important. Obviously, we can’t ask Trump what he’ll do with his billions to protect himself, but being president has its own rewards (ask Putin).
Mark Cuban told Neil Cavuto at Fox Business just two weeks ago:
“In the event Donald wins, I have no doubt in my mind the market tanks,” Cuban said. “If the polls look like there’s a decent chance that Donald could win, I’ll put a huge hedge on that’s over 100% of my equity positions… that protects me just in case he wins.”
Very comforting. Will your mutual fund manager cover you with a huge hedge that’s over 100% of your equity positions? Probably not, unless you are an accredited investor with a lot to lose.
But what does Wall Street think? I know, Trump says the system is rigged, but it takes time to unrig the system. Do you think Trump is just going to get a million young people to occupy Wall Street until they cave or something? Oh, wait. Never mind.
Here’s what Wall Street thinks about Trump. They’re freaking out. Literally, that’s the headline.
In short, a Trump presidency is the very definition of what markets hate: uncertainty. “Trump is widely considered to be reckless and Clinton is widely considered to be a friend to Wall Street,” explains Chris Irons, an analyst with the equity research firm GeoInvesting. “In terms of which of the two would shoot volatility into the market, he is clearly it.”
Société Générale analysts call it the “Trump factor.” They argue that the tightening of the polls between Trump and Clinton is a big reason for a sell-off in global bonds in September, which has led to the unease in equity markets, Bloomberg reported on Tuesday. Rates on both long-term Treasury and Japanese bonds have been rising since the polls started tightening, SocGen says.
Does your retirement portfolio include bonds? Your vote for Trump is going to cost you, big. It’s already costing you because he’s tightening in the polls. I hope you haven’t planned a luxury condo in Palm Beach County, because you may not be able to afford it. Maybe Trump will let you stay at Mar A Lago. And I’ve got a bridge for sale in Brooklyn.
New York Magazine just reported, “Some market prognosticators have suggested a win by Trump could send the stock market down at least 10 percent.” I hope your health insurance is paid up, because your next investment statement might give you chest pains.
Do you have money in savings or in your bank account? It probably won’t be worth as much if Trump wins.
“I don’t know what the U.S. dollar is worth with a Trump victory. I don’t know what it does to foreign flows into the U.S.,” says Josh Brown, CEO of financial adviser Ritzholtz Wealth Management. “Are foreign corporations as desirous of owning US dollars with someone so erratic in the White House?”
Markets hate uncertainty, and Trump is the king of uncertainty. Just having a decent chance of winning (and as of September 15, the bookies at Betfair have Trump’s odds under 2:1 for the first time) is causing the markets to–as my Jewish mother would say, Ver tsuzetst (actually she’d say “Farklempt”). As Trump would say: It’s very bad.
So you think Trump’s policies and deals will cause the markets to recover? That could be true, if his policies made sense. The problem is, they don’t. The markets don’t react to rhetoric or “believe me!” They don’t. Here, look for yourself.
If you invested $100 in Trump Hotels & Casino Resorts–a public company– in 1996, by 2005, when the company went private, you’d have somewhere around $4. The same $100 invested in a dart board tied to the stock market would have gotten you $200.
No professional on Wall Street believes a thing Trump says, and his policies–judging by what’s published–are equally disastrous.
CRFB estimates that Trump’s fiscal proposals as they are today would add $5.3 trillion to the nation’s debt in the first decade. That would push debt held by the public to 105% of GDP by 2026, up from 86% projected under current policies.
His plan would decrease both taxes and spending overall. His tax plan would reduce the amount of revenue going into federal coffers by nearly $6 trillion, CRFB notes, not including any potential effects of the tax changes on economic growth.
At the same time Trump would reduce spending on net by $1.2 trillion. He’d spend more ($2 trillion) on defense, veterans, child care and Medicare, but less ($3.2 trillion) on Obamacare, Medicaid and non-defense domestic spending.
The national debt, right now, is at $19.5 trillion, that’s $60,191 per citizen, and $163,192 per taxpayer. The Trump national debt would be $24.8 trillion; that’s $225,454 per current taxpayer. You just lost $62,262 by voting for Trump, and you haven’t even won yet.
A vote for Trump will cost you thousands of dollars in real money, from your retirement plan, and from you bank account, since the dollar will tank against foreign currency. (You want to see an example? Look at what Brexit did to the British pound, and I warn you, it will make your eyes glaze over.) Your investments will be worth less. Everything you buy will cost more, and your kids will be saddled with hundreds of thousands of dollars of additional government debt.
But, hey, you’ll be winning so much you’ll get sick of winning.