Politics frequently makes an appearance in my reports—sometimes to the frustration of readers, and other times, I hope, to their entertainment. Regardless of your stance, ignoring this week’s election would be unthinkable.
What’s even more remarkable is that, because I publish on Thursdays, I am writing this on Election Day, with the outcome still uncertain.
The importance of this election cannot be overstated; indeed, I struggle to recall a more consequential election in my more than 50 years in the industry.
Just before I entered the field, the oil crisis and the end of the Gold Standard set off seismic economic changes. Reflecting on that era, the elections of Margaret Thatcher and Ronald Reagan marked major positives for the global economy, while the elections of Bill Clinton and Tony Blair brought what I view as significant setbacks for the West and its economies.
At the turn of the century, the introduction of the Euro was another milestone—one that, in my view, has created severe economic drag, particularly for Northern Europe. The expansion and empowerment of the EU have come with high costs. Many may disagree, but the Euro’s purchasing power has diminished by roughly 90% compared to gold, the only truly stable currency. (And apologies to BTC enthusiasts, but it’s not there just yet.)
It doesn’t take a rocket scientist to see the trend: Western economies have fared better under freedom-oriented, right-of-center politicians and struggled under left-leaning leadership. No need to go back decades—just consider the state of the U.S. and global economies under Trump, compared to their current state with Biden in the White House.
Some may point to soaring equity markets as a sign of successful “Bidenomics.” But if you believe this, it’s time to take off the blinkers. Stock markets are up because they are buy-side products. Investors are tapping into the capital accumulated during the Trump era and chasing fashionable tech stocks, propelling equity prices to dizzying heights without much rhyme or reason. Yes, AI is the new internet, but let’s not forget the dot-com bubble burst in 2000, when frenzied buyers suddenly became sellers.
Of course, we can all selectively pull-out charts to validate our political perspectives. Yet there’s little disputing that during the Thatcher/Reagan era and under Trump’s presidency, growth was higher, unemployment was lower, and there was more freedom to grow and retain the rewards of our work.
This brings me to the fundamental divide between the two potential leaders. Harris represents a left-wing, tax-and-spend globalist perspective, while Trump stands as a libertarian, deregulation-driven nationalist. Personal ideology aside, from an investor’s standpoint, it’s hard to champion the idea of paying more tax on returns earned from the risks we take and the assets we hold.
Some argue that investors can still thrive under left-of-center governments, and historically, that’s sometimes been true. But remember the old adage: “Past performance is no guarantee of future gains.”
Today, Western debts are astronomical, and government spending is out of control. Sooner or later, someone will have to pay the bill. Given the shortage of resources, we investors and speculators make an easy target. Capital gains and inheritance taxes have already increased in the UK, and the idea of taxing unrealized gains is being floated. Who’s to say further levies on every trade won’t follow? And once these taxes are introduced, who knows how high they might go? The point may come when the government taxes our rewards so heavily that the risk becomes hardly worthwhile.
This is, of course, speculative. But if anyone claims such measures are impossible, I would ask, “Then why are civil servants investing so much time studying their feasibility?”
Major banks and institutions, eager to promote Harris, will likely receive preferential treatment. But what about small and mid-sized investors, whose participation is the oil that keeps markets running? We all know what happens when an engine runs without oil.
In conclusion, I’d prefer a low-taxing, libertarian president any day of the week. Markets may rally or fall—that’s fine. As speculators and short-term investors, we earn from market fluctuations. But if our profits are taxed to the hilt, taking on the risk with shrinking rewards, the future of this industry becomes uncertain.
Europe is already heading down the path of penalizing successful investors, and if Harris wins, she may well follow in her European allies’ footsteps.
The fat lady hasn’t sung yet, but I hope American investors and speculators consider these stakes before casting their votes in this pivotal election.
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