- Wrong again
- What will happen now?
- Final note
We wrote it, did you act on it?
‘The message seems to be clear. Now that Hillary is in the clear, there is next to nothing between her and the White House. Of course, while there may be ‘next to nothing’, there is something.
‘That “something” is the American voter and the Electoral College system. Markets and pollsters have gotten it wrong before. The Brexit vote is the most oft-quoted example.
‘So, who will win? Will Clinton win? Will Trump win?
‘We don’t know. But we wouldn’t be surprised if Trump pulled one out of the bag. For that reason, we still figure it makes sense for investors to play the “Trump Trade”.’
The good news is that the ‘Trump Trade’ isn’t a one-off event. There’s still time to act. Go here. Now.
Overnight, the Dow Jones Industrial Average closed up by 73.14 points, or 0.4%.
The S&P 500 gained 8.04 points, or 0.38%.
In Europe, the Euro Stoxx 50 index closed up 14.15 points, for a 0.47% gain. Meanwhile, the FTSE 100 gained 0.53%, and Germany’s DAX index rose 0.24%.
In Asian markets, Japan’s Nikkei 225 index is down 1,044.64 points, or 6.08%. China’s CSI 300 is down 0.73%.
In Australia, the S&P/ASX 200 is down 101.19 points, or 1.92%.
On the commodities markets, West Texas Intermediate crude oil is trading for US$43.51 per barrel. Brent crude is US$44.75 per barrel.
Gold is US$1,324.92 (AU$1,737.99) per troy ounce. Silver is US$18.79 (AU$24.68) per troy ounce.
The Aussie dollar is worth 76.21 US cents.
Here’s the home page of the Drudge Report website:
Click to enlarge
As is often the case, Matt Drudge nails it again.
Yes, the world is in shock.
As I write, the S&P/ASX 200 is down 1.92%.
Japan’s Nikkei 225 index is down 6.08%.
On the futures markets, the S&P 500 futures are down 4.89%.
Meanwhile, gold is up 3.79%, and its poor cousin, silver, is up 2.47%.
What more can we say on this, except to say, we told you so.
We told you that a Trump win was a much greater chance than the mainstream would have you believe.
True, we didn’t 100% believe it would happen. We thought the Hillary Clinton electioneering machine would do enough to get across the line.
But we knew it wasn’t a slam dunk. Just as voters in Britain upended the tables by voting for Brexit, voters in the US have upended the tables by voting for Donald J Trump.
This is why we advocated our two ‘Trump Trades’. The first is to own gold. Remember what Jim Rickards said at our Great Repression investment conference.
He said that gold could pop US$100 in the event of a Trump win.
It hasn’t done that yet. But it’s up over US$50, and could climb higher when European and US markets open later today and tomorrow morning respectively.
Unfortunately, we’re pretty certain that fewer than one in 500 of our subscribers would have followed our advice. Why? Because it was too much of a ‘fringe’ idea.
Most people tend not to go against the crowd. It doesn’t feel right. They feel embarrassed. What’s more, they fear looking stupid if the fringe idea doesn’t pan out.
But fringe ideas are important. They are the ideas at the ends of the bell curve…the fat tails, the ‘black swan’ events. They’re the events with a low probability of happening. And yet, from time to time, they do happen.
Mostly, they happen when few folks expect it.
Along with you, we considered Donald Trump to be an amusing figure in the US presidential race. We thought he had a chance to win the Republican nomination, but we didn’t fancy his chances against Hillary Clinton.
We fancied them less following the scandals that scuppered his candidacy less than two months from voting day.
But when the US Federal Bureau of Investigation (FBI) reopened their case on the Clinton email server two weeks ago, we sensed things could change.
I was sitting in the Qantas lounge at Cairns airport, waiting for the flight to Melbourne. As soon as I saw the news, I knew we had to prepare you for what some may think was unthinkable, unbelievable, and even unconscionable — a Donald Trump win.
We knew where most of the money was. The money was in the market. It was banking on a Clinton win. The way we figured it was if Clinton won, the market would return to around its previous level. We could get out of the Trump Trades without too much damage.
But if Trump won, that was the trade to be in. We figured stocks would slump, gold would take off, and a certain type of stock would do even better.
It was, as Jim Rickards likes to say, an asymmetric trade. That’s where we figured the risk of a big loss was comparatively small against the chance of a big win.
It’s true that these bets don’t always pay off. We’ve made plenty of predictions that haven’t panned out. But regardless, whether they happen or not, being prepared for them, and doing something about it to protect your wealth, and potentially profit, is something every investor should do.
So, why did the mainstream get it wrong?
Some folks won’t like what we’re about to say. But that’s probably exactly why they didn’t see a Trump win coming.
The fact is that the mainstream, especially the liberal media, and many of those with a centre and left of centre viewpoint, tend to look down on the working classes.
They call them stupid and deplorable, just because they don’t share the same view. The liberal media used to champion the working class and blue-collar workers, but now they mock them.
They write articles and show charts illustrating how only those with a low level of education support Brexit and Donald Trump. As this article from the New York Times shows:
Source: New York Times
Click to enlarge
There’s a distinct air of snobbery about it all.
Commenting about why famed basketball player Michael Jordan didn’t speak out on political matters, author David Halberstam suggested that it was perhaps because ‘Republicans buy sneakers too.’
The liberal media should remember that, whether they like it or not, those with a lower level of educational attainment can vote too.
Of course, they may simply be stating a fact by mentioning the respective voting patterns of the educated and less educated. After all, statistics never lie, do they?
But perhaps what they don’t realise is that people tend to have good and long memories. They can remember who has called them ‘stupid’ or ‘ill-educated’.
And while there isn’t really anything they can do on a day-to-day basis to hit back at the inner city chattering classes, or the liberal newspapers like the New York Times, Washington Post, or Sydney Morning Herald, they’ve suddenly found out that they can do something about it at the ballot box.
When the chattering classes railed against a vote for Brexit, saying that it would harm their right to live and work elsewhere in the EU, or that it would increase the cost of BMWs, French wine and Italian suits, the factory worker from Derby or Burnley was probably more worried (rightly or wrongly) about losing his or her job to a Polish or Hungarian immigrant.
When the chattering classes in New York and Boston stick up for illegal immigrants and refugees, the working class man or woman from Michigan and Ohio is probably more worried about the sustainability of their job, rather than whether a Mexican should have the right to enter and stay in the US illegally.
With that, and with the vote count almost complete, it’s pretty safe to say that Donald Trump has won.
Against all the odds, on 20 January 2017, Donald J Trump, real estate mogul, will be sworn in as the 45th president of the United States of America.
What will happen now?
Look out for a big night in the US markets. This one could be worth staying up for.
Oh, and remember to place that ‘Trump Trade’.
I wonder if he will lock her up…