Why Donald Trump is good for investors

Posted on 9 August 2017 by Douglas Chadwick

As I write this article Donald Trump has been President of the U.S.A. for 200 days. Remember that, at the time of his election, Trump was promising to kick-start American business. The question is: Has he done that? During his first 200 days Trump has signed forty three bills into law. Fifteen were reversing trivial Obama regulations, fourteen were routine and ceremonial in content, five were merely bureaucratic tweaks, and nine were space, science and veteran bills. There has been no infrastructure spending spree, no great reduction in taxes and a total failure to repeal Obama Care. As an outsider looking in, one would say that this performance was pathetic and does not stand up to comparison with that of any recent modern President. Yet the Dow Jones Index has crossed the 22,000 mark for the first time, up nearly 20% during the Trump administration. Unemployment continues to drop, wage rates show signs of increasing, house building is increasing and inflation is still under control. The dollar measured against the basket of its main trading partners has fallen by 10%, resulting in imports becoming more expensive and exports more competitive. As an American worker what is there not to like about all of this? Surely the above has not been orchestrated by the Trump administration since none of the members stay long enough to have any influence, and Mr. Trump is too busy on his phone.  Perhaps it means that preventing politicians from making changes and interfering with the status-quo allows the economy and the nation to settle and from there go on to improve and strengthen! In the U.K. with Brexit negotiations underway the key politicians amongst the “Remainers” and the “Leavers” are acting like flies in search of a windscreen. Maybe a period of inactivity from these people would benefit the U.K. economy just as it has in America. For those of us in the cheap seats with no influence on forthcoming events, all we can do is continue to watch the Saltydog numbers looking for those sectors that are moving forward and getting out of those sectors going into reverse. Recently it has looked as if UK Small Companies, China and the Emerging Market Sectors are going to continue with their run after the interruption of the recent election. The dark cloud on the horizon is still the so called Gilts and Bond bubble, but at the moment they continue to rise so it is still a question of being ready to move quickly should it become necessary. It was Jesse Livermore who said “The desire for constant action irrespective of underlying conditions is responsible for many traders’ losses.” Under those circumstances cash is a good investment. Be cautious and avoid “good night Vienna”!