Why Investors Shouldn’t Listen to Donald Trump

Alexander Green
by Alexander Green, Chief Investment Strategist, The Oxford Club
why-investors-should-not-listen-to-donald-trump

Donald Trump is wrong about a lot of things. But as a businessman, it’s particularly galling that he doesn’t understand the U.S. economy.

On the stump, he regularly tells us that America is in decline, that our international competitors are leaving us in the dust, and that countries like China, Japan and Mexico “are killing us.”

Really? Let’s take a dispassionate look at the facts.

America is the world’s biggest economy and richest country. We are responsible for almost a quarter of the world’s annual economic output.

The U.S. is the world’s largest producer of oil and gas. We also dominate in agriculture, technology, communications, medicine, finance, social media and entertainment. No other nation attracts more students, more immigrants or more investment capital.

The dollar is the world’s reserve currency. The U.S. military is the primary defender of the free world. (See World War I and World War II for details.)

Our banks have never been stronger. Over the last five years, JPMorgan Chase (NYSE: JPM), Bank of America (NYSE: BAC), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) have increased in value by $254.6 billion. Over the same period, their European competitors - Barclays (NYSE: BCS), Deutsche Bank (NYSE: DB), Credit Suisse (NYSE: CS), UBS (NYSE: UBS) and Royal Bank of Scotland (NYSE: RBS) - added just $9.5 billion.

We are the world leader in technological innovation. The Internet was created here. (Thank God for Al Gore, right?) So were Apple (Nasdaq: AAPL), Facebook (Nasdaq: FB), Amazon.com (Nasdaq: AMZN), Google (Nasdaq: GOOG), Tesla Motors (Nasdaq: TSLA), Twitter (NYSE: TWTR), Uber and hundreds of other technology leaders. American companies are creating thousands of revolutionary new therapies, vaccines and medical devices that improve our health and extend our lives.

I’d ask the man with the country’s worst combover why all this innovation doesn’t originate in other nations.

America’s share of global GDP is growing. In Europe and Japan it is declining.

The U.S. economy grew at 3.7% in the most recent quarter. That’s twice the rate of growth in Europe and four times that of Japan. We are now growing faster than most emerging markets.

Unemployment is at a seven-year low. The federal deficit as a percentage of GDP - 2.8% in 2014 - is at its lowest level in eight years.

Since the 2008 financial crisis, U.S. stocks have nearly tripled. Our stock market has outperformed all others. Nine out of 10 of the world’s most valuable companies are American.

We are in the midst of a new Golden Age for investors. Your choice of individual securities, mutual funds and ETFs has never been greater. Commissions and management fees have never been lower. Spreads have never been thinner. Trade executions have never been faster. Monitoring your portfolio has never been easier.

Educational attainment in this country has never been higher. Our life spans have never been longer. Our standard of living has never been greater.

There are no class distinctions or caste system to hold citizens back from economic success. (No one talks about the French Dream or the Canadian Dream.)

And Americans have never been richer. Last week, the Federal Reserve reported that U.S. household net worth hit another all-time record in the second quarter: $85.7 trillion.

It’s also worth noting that Americans are the most charitable people on Earth, giving the most both in the aggregate - $358 billion last year - and per capita.

Yes, we have problems here at home: a federal debt that is larger than our GDP, the public education monopoly, confiscatory tax rates, job-killing mandates and regulations and other anti-growth legislation. Still, the U.S. has never been more dominant on the global economic landscape.

Political pundits say the rap against Donald Trump is that he’s never worked in the public sector, that he has no experience in government.

That’s the least of it. Here’s a man who has spent his life in the private sector and still doesn’t understand American business.

He was born to a real estate tycoon, raised in an environment of privilege and private schools, and blessed with an inheritance estimated to be worth as much as $200 million.

Donald Trump was born rich and grew a lot richer. Good for him.

But it might have helped if along the way he’d grasped a little something about our nation’s unique competitive position in the world.

Good investing,

Alex

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