I’m Putting My Money Where My Mouth Is. Will You?

Marc Lichtenfeld By Marc Lichtenfeld, Chief Income Strategist, The Oxford Club

Special

Two weeks ago, I wrote an article about why a Donald Trump victory in November would lead to a short-term market sell-off. Now, I’m willing to put money on it.

There were two points made in the column. The first was that the market doesn’t like uncertainty, and Trump is a wild card. He is unpredictable. As a result, the market will sell off if he wins the White House.

The other point was that it doesn’t matter who wins in November. Regardless of who the president is or other dramatic events that take place, over the long term, the market goes up, roughly 7.5% per year on average – even after things like 9/11, the JFK assassination and World War II.

The article garnered a lot of attention. In fact, I probably received more emails on that column than any other I’ve written. The overwhelming majority disagreed with me. More on that in a moment.

Stephen Dietrich, managing editor of The Horn News, a fiercely independent political site that I read every day, thinks Trump will be good for the market – so much so that he named me as the first recipient of its “Getting the Horns” feature. According to Dietrich, the purpose of the column is to “take on people who are dead wrong about this country and the direction it’s heading in.”

(And my 10th grade English teacher said I’d never win anything for my writing…)

Dietrich started off nice, calling me a “brilliant investor,” but I think he was just buttering me up before slamming me.

Dietrich points out that the economy would benefit from the things Trump says he will accomplish (lower deficit, lower trade deficit, revitalized manufacturing, etc.).

I can’t argue with that.

But then Dietrich adds this head-scratcher: “And what the market really can’t handle is a steady stream of bad news – like the kind we’d get under a Hillary Clinton presidency.”

I have to ask Mr. Dietrich: Exactly what good news over the past seven years has enabled the market to triple? Unemployment has come way down, which is great, but wages haven’t grown at all, GDP growth and inflation have been so low that the Fed is frozen in this near-zero rate policy, and the debt has increased…

That’s a lot of crummy news that the market has been able to handle.

Yet this past December, I stopped being bullish for the first time since 2009 – because I understand market psychology and what makes markets move. The market and the economy don’t move in tandem. They certainly affect one another, but they are two different animals.

I guess that’s the difference between someone who has studied the markets for 20 years and someone who hasn’t.

Be sure to check out what else The Horn News said about me and Donald Trump. It’s a good read, no matter what side of the issue you’re on.


“You’re a Moron!”

My original column infuriated many people. I received literally hundreds of emails and comments. One person called me a moron. Another told me simply, “go to hell.” Many called me a “liberal piece of $&*%,” which is funny because in last week’s Investment U column, commenters accused me of being a fan of Limbaugh, Cruz and Trump.

Nearly all of the emails I received attacked me personally, rather than my argument. Fortunately, I’m a big boy and can take it.

But one email from Andy was thought-provoking and sparked an idea that I’m excited about and hope you will be too.

He wrote:

Hey Marc, put your money where your column is. 30% to 50% drop due to Trump? I will hold this email until next year and I bet you NO DECLINE If Trump wins.

So what say you??

I will, in fact, put my money where my column is.

My Proposal

If Donald Trump is elected president and the S&P 500 has not fallen by at least 30% at some point between Election Day 2016 and December 31, 2017, I will donate $1,000 of my own money to the charity of Wealthy Retirement readers’ choice.

If there is a charity you’d like to be the recipient of a $1,000 donation from me if I’m wrong, please leave the name of the charity in the comments section. The three charities with the highest combined total of mentions and likes will be considered finalists. Then, Wealthy Retirement readers will vote for the winner. (We will vet the top three finalists before putting it to a vote to ensure they are legitimate nonprofit organizations.)

If, however, I am right and the S&P 500 does decline 30% or more after a Donald Trump win, then I ask those who are taking me up on this bet to donate an amount of their choosing to the Wounded Warrior Project, which helps injured soldiers.

This way, those of us with strong opinions can put our money where our mouths are, have some fun and benefit a worthwhile charity.

What do you say? Are you sure enough about your opinion to put your money where your mouth is? If so, leave the charity you’d like considered in the comments section below.

And Mr. Dietrich, I expect you will be the first one to accept my challenge and will name your favorite charity in the comments section.

Good investing,

Marc

P.S. To see just how many folks agree with Marc’s stance, we ran a poll last week asking readers which candidate would be better for the markets: Donald Trump or Hillary Clinton. Overwhelmingly, you said Donald Trump is the better choice – 98.8% of you, in fact. I’m speechless. It’s time to put your money where your mouth is.