Allow me to start off by saying I hate politics. I don’t find it interesting, authentic, honest or beneficial. Politics are a necessary evil in my view. I believe you vote for the leader, not the party, but neither the president nor the parties in charge ever seem to get anything right.
Whew! Now that I got that out of the way, I think it’s worth addressing where things stand now that President Joe Biden isn’t seeking reelection. I’ve argued before that the tech sector would likely suffer most, at least relatively speaking, if former President Donald Trump were to win in November. Historically, tech stocks underperform under Republican administrations. It’s not a political statement but rather a factual one.
Following the assassination attempt on Trump, tech stocks took a big hit. Why? Because the attempt on Trump increased the betting odds that he would become the next president. And, again, tech stocks historically do not perform as well under a Republican president.
Here’s where things get interesting though. Tech stocks are seemingly cheering Biden’s endorsement of Vice President Kamala Harris. This is because as I mentioned, the tech sector does better under a Democrat. The market itself seems to be betting that the Dems have a real shot at Harris becoming the next president, and investors are incorporating that into their momentum trades.
So, we can clearly make the argument here that if tech is leading, it’s the stock market betting on Harris. If tech is lagging, it’s the stock market betting on Trump. But you know the one bet that is consistent no matter who wins? Increasing government debt.
It doesn’t matter if it’s Trump, Harris, or even Robert F. Kennedy Jr. – the one thing we can say with some conviction is that government debt will only continue to rise. That government spending will continue to run rampant, potentially leading to higher interest rates in the long term. And what that means is that no matter who wins in the election, we as a nation lose. Politicians will keep saddling our children with liabilities for years to come.
On the date of publication, Michael Gayed did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
