Pondering the Future: Trump’s Rumored Arrest, Presidential Elections, and Asset Allocation
I don't like conspiracy theories. But history insists that the resolution of long-term debt cycles usually requires some sort of hard political action: a political crisis, a revolution, or a war. Just recall the Great Depression of the 1930s.
Since the start of trade wars back in 2017-2018 it became obvious that the current debt cycle was approaching its climax. Therefore, I paid attention to what DoubleLine Capital CEO Jeffrey Gundlach said back in October 2020: 'When I said that I think Trump is going to win in 2016, I also said that, if you think 2016 is weird, just wait for 2020. Well, if you think 2020 is weird, just wait until 2024. You ain’t seen nothing yet.'
Gundlach was quoted by Financial Advisor magazine as saying that he expects widening economic inequality to bring about some sort of revolution by 2027, with the 2024 presidential election directly in the path of massive social, economic and political change. He thought Trump would win again, though he was not convinced. However, he was right that the 2020 election and its aftermath was weird, to put it mildly.
Gundlach also told investors in a Real Vision interview in October 2020 that it’d be a good idea to avoid the stock market because it was poised to “crack pretty hard,” particularly in the U.S. “I actually think owning 25% gold isn’t crazy right now. Nor do I think owning 25% cash is crazy,” he said.
He was wrong regarding the timing of a stock market correction by a year. But as Warren Buffet once said: "... you should navigate, not predict, the stock market." I would add that you can actually predict the market if you have some insider information. Otherwise, just stick to navigating it. :)
Now Donald Trump says that he expects to get arrested on March 21, 2023. In response to this news Elon Musk tweeted: 'If this happens, Trump will be re-elected in a landslide victory.' I think there is some possibility that neither President Biden nor former President Trump will be among the final contenders.
I don't have any insider information, but there is already an ongoing large-scale military conflict, and potentially another one somewhere down the road. Economic and trade wars have become the norm. Thus, it looks like the 2024 election has a chance of becoming even weirder, indeed...
What should you do with your money in this situation? BofA analysts think it's time to shift your portfolio from a 60/40 allocation (stocks/bonds) towards a 25/25/25/25 one (stocks, bonds, cash, commodities). If this is the case we are just back to the 1970s again.
The more things change, the more they stay the same.
