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November 8, 2016 | Brexit 2

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.


I was wrong. The stock market, too. The bond market messed up. So did the forex. As the US presidential slugfest unfolded it became evident there was Brexit in the air. By 9 pm ET Tuesday night traders and specuvestors – who’d gambled widely in the last two days that Donald was pooched – scrambled to unwind their positions and staunch their losses.

The Mexican peso croaked, since the Trumpinator would tear up NAFTA, slap tariffs on imports and build a honking big wall. Wall Street recoiled with futures shedding over 3% (that was 700 points on the Dow by 11 pm), because a President Trump would mean uncertainty, volatility and a good chance for political chaos. The Canadian dollar swooned along with oil, which shed 3% of its value in a couple of hours. Asian markets sank, setting the stage for Europe. Meanwhile gold rose above $1,300 an ounce again, and bond prices soared as yields plunged.

So, Brexit II. As I said in the last post, you’d think those who try to time the markets would learn. They can score on a good gamble. They can also have their asses handed to them on a night like this. And it’s all based on guesses. Or in the case of politics, pollsters that voters enjoy lying to.

There are three messages I should pass along. One of them involves humility, which makes it, ah, difficult.

First, ignore your investments on Wednesday. Markets will gyrate for hours, days or a few weeks. Not because the election of a goofy billionaire or a mistrusted hack means the end of life as we know it, but because of all those investment bets I just mentioned. Never buy into a boom nor sell into a storm. If you have a balanced portfolio then your bonds will soar as your stocks tank, mitigating the impact. That’s by design. It’s why you need fixed income.

Second, as stated here often, both Trump and Clinton are flawed characters. Neither deserved to be a president. As also pointed out, this (like Brexit) was parochialism vs globalism, protectionism vs free trade, walls vs immigration and the ascendancy of patriotism plus revenge against elites. Let’s hope the new POTUS fully understands this election wasn’t actually about them. This stuff won’t go away.

Finally, like the majority of souls who come here (witness the weekend poll), a Trump surge was not on my radar.

I found it impossible to believe tens of millions of people would fall for political policies articulated in tweets and hastags, from a guy who brags about not paying taxes, admits to being a groper and promotes racial and religious intolerance. Trump has made outsiders feel like insiders because he legitimizes human prejudice and mainstreams bigotry. He became a powerful leader by being a meticulous follower. I did not think this was possible. I underestimated him. I overestimated humanity.

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November 8th, 2016

Posted In: The Greater Fool

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