Saving Donald Trump
New Capital’s Annual Conference will be held virtually this year on October 30. We have a dynamic panel of keynote speakers scheduled:
Professor David Dow of the University of Houston School of Law will discuss How Racist Is America’s Criminal Justice System?
Dr. William Bishai and Dr. David Thomas both of Johns Hopkins School of Medicine will discuss Covid-19 and their latest research work in vaccines
I will discuss Markets, Elections, and Beyond
New Capital clients who register to attend will receive an UberEats gift card so you can enjoy lunch on us. Prospective clients and the public are welcome to register (you’ll have to become a client however to get lunch).
The news of President Donald Trump’s illness with COVID-19 has, understandably, dominated the news at this time. As a practicing Buddhist, one of the vows I regularly recite is:
Beings are numberless, I vow to save them.
There is, also, a meditation practice called Tonglen, in which we begin by offering good wishes for those we love, like our family and friends; and then we offer good wishes for those we may be neutral about, like the people walking by on the street; and finally, we offer good wishes for those who represent more problematic, even negative, feelings for us. In this way we radiate out compassion further and further from our “comfort zone”, bringing positive karma to the entire world.
I have offered good wishes to President Donald J. Trump and his family during this morning’s meditation. And I also believe that saving Donald Trump will require both returning him to health (which requires the skill of his doctors) and returning him to a “normal” life (which requires voters to elect a different President).
I do not come to this second conclusion lightly.
Financial advisors tend by temperament to be a conservative lot, and we focus a lot on risks. We are (or should be) constantly assessing the following equation whenever we help our clients with anything in their lives, whether it is an investment, career move, or life event:
Probable Returns - Probable Risks = Probable Result
When the Probable Result is strongly above zero, you probably (but not necessarily) have a winner. When the Probable Result is not much above zero, you could have a winner, but it could turn out to be a loser, so you should analyze some more. When the Probable Result is not much below zero, you could have a loser, but it could also surprise and turn out to be a winner. And when the Probable Result is strongly negative, you should probably take a pass - because the risks may be far too pronounced.
The equation addresses “probable” returns, risks, and results. Because the future is fundamentally unknown, we can only explore probabilities - likelihoods - not mere possibilities. Many, even infinitely many, things are possible. Donald Trump, theoretically, could, in a second term, heal this hurting nation.
But the likelihood, in my view, of Trump doing so is extraordinarily small.
I understand that there are many who may think that an important Probable Return of a second Trump term could well be an ongoing good stock market. I can only point out that the S&P 500 is currently trading at 21 times forward earnings according to Edward Yardeni, who reliably and weekly tracks the index:
21 times earnings equates to a 4.75% probable return going forward on the largest companies in America, and therefore in the world. For perspective, the average annual return on the S&P 500 since 1926 is 10%.
Can higher prices - in both stocks and bonds - result from already high prices? Yes, they can, but only if things, pretty much everywhere, get much better. There is a possibility that President Donald Trump could lead things to such a place. But I believe the odds are strongly, even extraordinarily strongly, against that possibility occurring.
And I am concerned about them getting worse, which brings us now to the second term of the equation, Probable Risks, including (in no particular order):
Mismanagement of a deadly pandemic
Environmental crises
Financial market extreme volatility
Neglect of public infrastructure
Civil strife
Attrition of critical federal government departments
Erosion of democracy
Cultivation of a culture of dishonesty
Disintegration of international alliances and trade partnerships
Subservience to a foreign power
I do not write to encourage you - at all - to vote for whomever I will vote for. Sometimes as a financial advisor, we can work together to identify a solution that might well work for you, something you can do, be, have, or give. Other times, we can only look at an option and completely rule it out, leaving you with more work to do to figure out what to do, be, have, or give.
Maybe there is a candidate, Republican, Democrat, or other party who you particularly like. Maybe there is someone you know through the news or from a distance. Maybe you have always admired a parent, adult child, sibling, friend, or acquaintance and thought they would make a great President. Maybe there is even someone you don’t particularly care for, or even dislike, but who you think would make at least a decent President. Maybe you think you yourself might make a great leader for our country and want to give it a try. Whoever settles in your mind, whether on the ballot or not, who is a natural born citizen, at least 35 years of age, and has for at least 14 years resided in the United States, consider them.
I am highly concerned that President Trump, in a second term, would unnecessarily risk my clients’ health, wealth, and happiness. I, as a professional, cannot ignore those enormous risks, or else I will risk my clients’ trust. Still, with full compassion, I offer:
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