Donald Trump was sworn in as the 47th president of the United States on the 20th of January. There are many people who feel an intense dislike for the man, but there is one thing you cannot take away from him and that is the fact that he is a man of action and creates a lot of activity around him. As an investor you might want to take his inaugural speech and imagine someone else delivering it, perhaps the more likable Barack Obama; or you may really take a flight of fancy and imagine our own president giving such a powerful speech. Would you change your mind about the message that was given in such an instance?
Like it or not, for the next four years Donald Trump will have an enormous impact on your investments. There are some people who say that the next five years will be the most critical period for your investment portfolio because from where we are now, nobody can predict what our world is going to be like after 2030, due to exponential advancements in technology. Perhaps we should look at some of the more controversial things president Trump said or did and decide whether it is good or bad for our investments.
The attendance of company CEOs
Sitting right behind Donald Trump were some of the most powerful CEOs in the world: Mark Zuckerberg (Meta), Jeff Bezos (Amazon and Washington Post), Tim Cook of Apple and Sundar Pichai of Google had all accepted invitations to attend the event. This is a very clear indication that the new administration will be pro-business, as long as it is American business. This will support any investments you have in American companies.
Declaring war against illegal immigration and criminal networks
Trump declared a national emergency on the Mexican border and designated the cartels as “foreign terrorist organisations”. Trump also said he would use the “full and immense power of the federal and state law enforcement” to combat criminal gangs in the US. Imagine Cyril Ramaphosa doing this. It is estimated that there are up to five million undocumented migrants in South Africa at the moment and that the construction mafia is extorting billions of rands from infrastructure projects; taking us right back to the days of the Guptas.
Terminating the gender debate and equity employment issues
Trump declared that there would henceforth be “only two genders: male and female” in the US. He vowed to make this an official policy of his government, and promised to sign an executive order that would roll back protections for transgender people and terminate diversity, equity and inclusion (DEI) programmes within the federal government. Trump promised that the US government would be colour-blind and merit-based. We can compare the DEI programmes to our own BEE regulations. Under the Biden administration, very incompetent people were put in very important positions with disastrous consequences. As South Africans, this is probably the one policy change we urgently need to embrace. Over the last thirty years, our government has destroyed most of our SOEs; like ESKOM, Rand Water, Transnet, SAA, Post Office, SABC, Road Accident Fund and many more; simply by using colour instead of merit as criterion for appointments.
Climate, energy and health
Trump has signed off on withdrawing the US from the Paris Climate Accord – the landmark international deal to limit rising global temperatures. Trump has declared a “national energy emergency” and promised to fill up US oil reserves again. Trump has halted the Green New Deal, a series of Biden measures aimed at boosting green jobs, regulating the fossil fuel industry and limiting pollution. Trump also signed an executive order to begin the process of withdrawing the US from the UN’s World Health Organization (WHO). This marks the second time Trump has ordered the US be pulled out of the WHO, after Biden re-entered it. He has been critical of how the Geneva-based institution handled Covid-19. Both these actions will have an impact on your investments in the much talked-about ESG ( Environmental, Social and Governance) initiatives. Some years ago, a group of activists (including a little girl called Greta Thunberg) started a drive to force companies to replace profitable business practice with something that would be better for the environment and social well-being, irrespective of cost to the company. Although the intensions of the drive seemed to be sound, the practical outcomes were not. We have seen many companies scale down their ESG drives; and investments in funds with an ESG theme are underperforming non-ESG funds.
If we ignore Donald Trump’s not universally liked personality and just look at what the next four years will be offering to you as an investor, it is clear that investing in US companies will be crucial. The focus will be on business excellence: if you can do the job, you will be rewarded; but if you are there for any other reason, you will be sidelined. We are in a race where the future beyond 2030 is unclear. We have to make the next five years count.
