Before the midterms the predictions from pollsters there was predictions of a red wave or the Republicans were going to win seats to control government. For investors, you had the ability to do something or nothing. At the same time, former Presidential Trump said he was going to make a major announcement a week after the election. If you put 2 and 2 together, you would conclude it was a candidacy for the Presidential nominee for the Republican ticket.
In an article by Shreyashi Sanyal and Anisha Sircar of Reuters, prior to the midterms, shares in Digital World Acquistions Corp the blank check company looking to take Donald Trump’s social media venture public jumped in value 24%. If you are a diehard fan of Mr. Trump and bought much earlier, your loss for the year is over 58%.
Since the midterms and no red wave for the Republican Party and many of the candidates endorsed by Mr. Tump losing, the shares of Digital World have eased off.
Linking to dividend paying stocks, it is a good idea to see which companies will benefit or should benefit from changes in political leadership. Sometimes the answer is very few, sometimes the answer is industry groups because all politicians tend to vote extra money for their favorite groups. One of the easy examples is Republicans tend to give the oil and gas industry less regulation or drill baby drill; while Democrats tend to give solar companies greater incentives. There are natural alliances between the 2 parties although in reality both will do something for each, but it will be easier to see for one party or the other. Just remember you are not looking for a bounce but long term results and saying no is a good thing.
There are more questions than answers, till the next time – to raising questions.