In today’s Exponential Investor…
- Every four years
- Where I’ve put my money
- What is it to DCA?
Hopefully you enjoyed yesterday’s Exponential Investor about how to look for stocks.
It’s just a little thing to try and help you on the path to doing what I do, but doing it for yourself.
I have no problem sharing with you the things I do and how I go about it. The aim is to also help you “level up” with your investing.
That way you can make informed, smart decisions for yourself about your own financial future. I’ll always be here to help on that journey. But if one day you’ve learnt enough that you don’t need my help or our help at Southbank Investment Research, then we’ll have done a pretty good job.
With that said, it’s still always good to get external and sometimes differing views of the markets, investing, geopolitical events, social change, or anything else you can think of.
As I’ve been saying for some time, I think everyone should try and access information that’s trusted, but they vehemently disagree with. An opposing view or analysis can help you become a better investor.
When it comes to opposing views and analysis, there’s not too much that can compete with the views of political elections.
An election by nature is one of the most divisive things we experience as a society. It’s pitting one half of the people against the other. It’s quite binary in that nature, albeit the mechanisms and the process of getting to a decision is nothing but a grey area.
Excitingly we’re now, today on the cusp of one of the biggest political theatres there is.
I’ve put my money where my mouth is
World Cups come around every four years. The Olympics come around every four years (except this year). It seems like the most exciting events come around every four years.
The US presidential elections is one such event as well.
Every four years we get ready and prepare for another one. Today is that day. The day when we get to find out who becomes the “most powerful person on earth”.
It could of course be the incumbent president, Donald Trump. It may be the challenger Joe Biden. Weirdly, I’ve even still seen some polls where people think it could be Hillary Clinton!
One thing I can tell you is that when the next US president is announced, it won’t be Clinton.
She had her run in 2016, and lost.
Do you remember that election? I do.
Everyone (including me) thought Clinton would win it. There were even betting agencies that paid out on Clinton early such was her lead in the polls.
Bet they regret that decision…
As we all know, she didn’t win. All the polls said she was winning leading into the election. All the commentary was laughing away the possibility of a Trump win. All the bookies had Clinton as a raging favourite.
None of it mattered.
The majority of the polls were wrong. The betting agencies were wrong. I was wrong. A lot of people were wrong. Many put it down to the “silent majority”. That is, those who were voting for Trump but just didn’t participate in polls or participated but didn’t want to say Trump through fear of social persecution.
This time around, we’ve seen how powerful the “Trump machine” can be. We know he’s got a massive social presence. There’s even the whole mysterious QAnon surge of popularism that sits Trump at the top of their “Great Awakening”.
We also know right now things looks weirdly like they did in 2016.
Right now, pretty much everyone thinks Biden is going to win. The media thinks it, the polls all say he’s massively in front, even the bookies have him as a raging favourite.
Yesterday I jumped into my Bet365 account to find Trump at £2.70 and Biden at £1.50.
Now I love a good punt. Just a little flutter of a fiver here or there on a football multi, maybe one of the big horse races back in Australia, often on a political election.
I’ve put a fiver on Trump to win at £2.70. That means, if he wins, I stand to win a whopping £13.50 (including my original fiver).
What to do next
You might think otherwise. As I mentioned earlier, I’m usually pretty rubbish at election betting. My football betting is much better!
Going by that theory, since I’ve bet on Trump, Biden is probably going to win now. That will vindicate all the polls, most of the mainstream media and all the bookies.
Of course…Trump may win this, just like he did in 2016. In which case, once again, all the polls, the mainstream and the bookies will be wrong.
If they are, what’s that going to do to the market? How do you play a Trump win or a Biden win? If volatility is coming back in force, what moves do you make?
Not to mention this comes two days before the UK goes into another national lockdown they say will last four weeks, but we all know could last indefinitely.
They’ve lied about lockdowns before, they will lie again. There’s also the spectre of Brexit languishing too.
All three of those things at once is about as uncertain as it gets.
What do you do?
Well I tell you what I’ll be doing.
Nothing. Well, nothing different to what I already do. I continue to believe that even with all this uncertainty going on, all this volatility, there continues to be remarkable opportunities in the market.
Sure, I’m still short the Nasdaq 100. That’s a different kettle of fish. But for the bulk of the market, and particularly here in the UK, these uncertain times present great opportunities for long-term wealth.
That’s why I’m continuing to invest in the market, the UK market.
I believe the best way to invest is via a technique called “dollar-cost averaging”. You might be very familiar with that term already. Maybe you even put it into practice yourself.
The quick description of it is drip feeding investment into the market to average out position sizes. That way you’re not “putting the house” so to speak on one entry point. You can smooth out volatility but adding to positions through ups and downs for a long-term strategy.
It is a little more nuanced than that. That’s why in tomorrow’s Exponential Investor, I’ll explain dollar-cost averaging in much more detail, with examples and also again focusing in on a few of the UK industries I think you should be applying this strategy to.
Hopefully it helps to give you the tools needed to make sure you’re playing the market in the right way, regardless of how volatile and uncertain things gets.
Editor, Exponential Investor