The market's revealed "Trump addiction." Is the expiration 2020?!
Last week's stock prices moved somewhat weakly.
In the United States,the momentum to impeach President Trump (to remove him from office) is rising. The trigger is the suspicions concerning Hunter Biden, the son of potential next Democratic presidential candidate, former Vice President Biden.
What is the “suspicion” that could drive the president to impeachment?
There are allegations that Biden tried to obstruct investigations by Ukrainian authorities into corruption involving a Ukrainian natural gas company in which Biden’s son once served.
Viewed alone, it might seem that Biden is at fault, butthe issue is that Trump, knowing this, used political pressure to cause Ukraine to pursue an investigation against Biden. Specifically, this hints at withdrawal of military aid to Ukraine.
Using government power, especially military might, to bring down one's political rival ismerely a personal and presidential power abuse. The opposition and the Democratic Party are concerned about this.
When this issue came to light, the market reacted negatively.If Trump were to be removed from office, stock prices are likely to fall.
The stock market, manipulated by Trump, has come to depend on him without realizing
Originally, the ruling party, the Republican Party, is said to be market-friendly, while the Democrats are market-unfriendly. But more than that,investors have come to depend on Trump to sustain stock prices.
In the past 1–2 years, stock price fluctuations have centered on tensions and resolutions of the US-China trade war and on the battles over Federal Reserve rate cuts. In all cases, the origin lies in presidential statements. And as a resultthe president has succeeded in pushing up stock prices.
Isn’t this a very dangerous sign?
Anyway, clouds hang over the world economy. A correction in the 10-year rally in stock prices could come at any time, but Trump is doing his best to prevent that.
Trump cares about stock prices because he aims to win the next presidential election (2020). In the United States, where investors are keen on investments, stock prices and presidential approval ratings are closely linked, sorising stock prices are an imperative for a president seeking reelection.
The market understands this, and still rides the wave when stock prices rise. Regardless of policy merits, if it looks like they will go up, people jump on the bandwagon.The market has already fallen into “Trump addiction.”.
If President Trump were to be impeached,the pain would be felt suddenly, like a patient whose morphine has worn off.
Moreover, even if reelected, there will be no third election run by him. In other words, the motivation to raise stock prices in the second term would disappear (unless he tries to designate a family member as successor).
In short,the market’s “Trump addiction” has a shelf life until 2020.
Coincidentally, 2020 is also the timing when Japan finishes hosting the Olympics and the “special demand” tapers off. It would be wise not to assume the current steady market will continue indefinitely.
If you want investment success, be a Contraarian
As you can see, I often speak with a pessimistic outlook, but that doesn’t mean I am a pessimist at heart. If I were inherently pessimistic, I would have abandoned stock investing long ago, especially long-term investing.
My pessimistic tone comes from thinkingthe market is leaning too far toward optimism. While it’s nice when holdings rise, becoming complacent can lead to trouble. Buying now may result in catching a high price.
The perfect buying opportunity is when the majority have given up in despair and stock prices plunge dramatically. Even in the last decade, investing during the Lehman Shock, the China shock, or Brexit when prices fell significantly would have yielded substantial profits.
When the next crash comes, I will buy eagerly. In that sense, I am not a pessimist but a contrarian.
Being a contrarian is a major trait for making profits in the market. Becausethe remaining profit is greater where the crowd does not go, and where no one is, there is a higher likelihood of substantial gains.
The same can be said for business. For example, when recession hits, companies like Nitori and Nidec invest aggressively, outpace competitors, and continue to reap large profits.
There is also a market adage similar to this.
Where others take a path, there lies a mountain of flowers
This proverb is one of the first things that comes to mind.
Stock prices rise sometimes and fall others.
In long-term investing, buying at even 1 yen cheaper is undoubtedly correct, sothere is no reason to buy while prices are rising.
If you do not need to become rich quickly,prepare steadily with knowledge and money for the inevitable “when prices fall”. Merely adhering to this will clearly improve investment performance.
