Wow! Donald Trump will be the 45th President of The United States. The polls were wrong. The political pundits were wrong. And I was wrong as well. We’re now going to experience a hammering in all stock markets around the world due to policy uncertainty. Hopefully the sell-off is very temporary like Brexit’s. The only thing I was right about was aggressively saving cash all year and nibbling on some bonds. I’ve been waiting to build a large bond portfolio for a while and am surprised the 10-year yield is surging to ~2%.
If you stayed up late enough to listen to Donald’s victory speech, you should come away feeling better that everything will be OK if you are a Hillary supporter. Donald spoke with a lot of humility. He talked about bringing the nation back together, working with every country, and helping every citizen. In a word, he sounded presidential. Have a listen if you haven’t already.
As financial freedom seekers, we should accept the outcome and look at the bright side of change. Out with the status quo and in with the new. Let’s see what a businessman can do versus a career politician.
Where It All Went Wrong
It’s now clear Hillary had too many trust issues to overcome. Further, instead of sounding like she was always reading from a script, she could have spoken in a more natural, genuine tone. Charisma counts. Joe Biden probably should have run instead. He must be feeling pretty guilty right about now.
As I wrote in Affirmative Action Based On Income and Wealth, there’s a large part of the country that feels ignored by the establishment. They’ve seen their jobs evaporate due to globalization and their incomes decline over the past eight years. Yet they see Obama being soft on immigration and favoring minorities. Of course they want change.
On the flip side, look at all the states that voted for Hillary. It’s not a coincidence the blue states have seen some of the fastest increases in employment growth, property price appreciation, and wealth creation. When things are going well, the last thing you want is change.
It’s pretty amazing that despite a biased media and tremendous celebrity backing, Hillary still lost. It just goes to show you how bad things are for many Americans.
Here’s a fascinating snapshot of how people ages 18-25 voted. It’s not a big surprise given young people pay less taxes. It’s a good life lesson of not always getting what you want. Be nice to your elders. Your massive inheritances may depend on it!
Time To Get Back To Work
I told myself if Donald wins, I’ll probably do these three things:
- Look for a full-time job again
- Increase the amount of consulting clients (corporate and personal)
- Publish more content
Lower tax rates is an incentive to work harder. I’ve had it really good since 2012, but all good things have to come to an end. Besides, paying for your own healthcare is so damn expensive!
Here is Trump’s tax plan from his website:
The Trump Plan will collapse the current seven tax brackets to three brackets. The rates and breakpoints are as shown below. Low-income Americans will have an effective income tax rate of 0. The tax brackets are similar to those in the House GOP tax blueprint.
Brackets & Rates for Married-Joint filers:
Less than $75,000: 12% (from 10% – 15% currently)
More than $75,000 but less than $225,000: 25% (from 25% and 28% currently)
More than $225,000: 33% (from 33%, 35%, and 39.6% currently)
*Brackets for single filers are ½ of these amountsThe Trump Plan will retain the existing capital gains rate structure (maximum rate of 20 percent) with tax brackets shown above. Carried interest will be taxed as ordinary income.
The 3.8 percent Obamacare tax on investment income will be repealed, as will the alternative minimum tax.
The Trump Plan will lower the business tax rate from 35 percent to 15 percent, and eliminate the corporate alternative minimum tax. This rate is available to all businesses, both small and large, that want to retain the profits within the business.
Besides starting a business, the biggest benefit under Donald’s tax plan is to therefore try and make as much above $466,000 (current married couple income minimum for 39.6% tax rate) as possible. Tough for many to do, but worth a shot. For all incomes less than $466,000, not much changes except for the Net Investment Income tax going away for those making more than $200,000/$250,000 as individuals/married couples.
The sweet spot for maximum happiness continues to be an individual or married couple income of around $200,000 – $250,000. They should hopefully pay an effective 25% tax rate or less as a result, although it’s unsure exactly whether individuals making between $91,150 and $190,150 will really see an increase in their taxes from a 28% marginal rate to a 33% marginal rate. A 25% tax rate is just the right amount for everyone to feel good about contributing to our great nation. It’s also low enough that it may increase tax revenue overall due to lower tax fraud.
I don’t think I’ll have too much trouble finding more consulting gigs and writing more content to boost online revenue. My main problem will be finding a full-time job. After almost five years away from the system, it’s going to be very difficult for me to assimilate. Employers are always skeptical of me wanting to come back to work as well. At the very least, I can entertain you with new job failure stories!
Finally, for those folks who say they plan to move to Canada, come on now. They’ve got some of the most unaffordable real estate in the world, high-paying jobs are not plentiful, and you’ll be freezing for five months a year. Besides, America needs your tax dollars. If you’re a disappointed Hillary supporter who must move, just move to California or Hawaii. Life is really nice out here.
Readers, how are you feeling post election? Have you properly hedged your portfolio for volatility? Are you buying stock in the sell-off? Or do you see money flowing into real estate given the volatility? Now is a great time to revisit my post: Real Estate vs Stocks: Which Is A Better Investment?
I’d be interested in a Trump report card post. You seemed pretty confident in his skills upon election and now I wonder if those hold true.
Financial Samurai says
November 9, 2016 at 7:27 am
Canada property prices might surge again, or be saved if Americans downstairs actually relocate upstairs! But, you and I know it’s mostly rhetoric.
I’m glad the stock market is FLAT and Trump’s words sounded assuring
I’m a progressive and I hate that so many progressives/liberals pretend that they will abandon this country whenever a leader we consider bad gets elected. It’s especially upsetting this year when so many people throughout the world are actually displaced and trying to find somewhere to live. End rant.
I will continue to build up my business. My clients/potential clients are terrified of what the Administration will look like, and they are coming calling. This may make it possible for me to leave my FT gig and do my business FT. I don’t know what I would do about insurance if the ACA goes away. Probably go without and pray I don’t get sick.
The winning of Trump is a surprise for all.But anyways, in the long run, it should not matter who wins.We should focus on ourselves.
Sam, great post. I was thinking the same. Paying your own health ins sucks I could make payments on a new Caddy for what I’m paying in insurance. Considering going back to work after a few years too. It will be difficult to do it and actually find a place that offers health benes. Will be looking forward to see how it works for you and will be checking back to see your progress. Its nice to see someone in the same position as me. Doesn’t have to work, but why not.
After the Wells Fargo scandal, I had been watching WFC in the $44-45 range waiting to get the capital to buy. Trump gets elected, and now the stock is at $51/share. I guess people are bullish on banks now that the candidate who supports deregulation is now going to be in office.
#thankstrump
Sincerely,
ARB–Angry Retail Banker
Are you really serious about finding a new full-time job? Why – to earn few more extra $$ that you don’t need?
Considering the fact that you are very well off financially what upside of having a job is there? If you want “private jet-set, yacht” lifestyle then a job won’t help. So it really doesn’t click in my head :)
Why not enjoy more of life instead?
I’ve always enjoyed work, especially when the work is meaningful and with a good group of people. If I can get paid to do something fun, and pay less taxes, then absolutely I’d be willing to go back to work full-time.
Imagine getting paid $700,000 a year to get back massages, and foot rubs for four hours a day and then write a report about how good these massages and foot rubs are. That would be a pretty sweet job! These type of jobs are out there. You just have to go find it.
See: https://www.financialsamurai.com/its-impossible-to-stay-retired-once-you-retire-early/
If Clinton supporters really want to do something they shouldn’t move to California or Hawaii. They should all move to Ohio. 100,000 politically active liberals could make that no longer a swing state.
Regarding the map showing what the results were for people 18-25… that is not surprising at all. The majority of these people like what the democrats promise them: fee college, free healthcare, free whatever.
It is even more interesting to see how their views change as their perspectives change. Once these people start working career jobs and start seeing what the true costs of these social programs are, many start to change their minds.
The next 4-8 years are going to be very interesting indeed. I think the Republicans will be able to get a lot done (as far as what is on their agenda). This is the first time in a VERY long time since the presidency, the house and the senate have all been under control/majority all of the same party.
Also, the Republicans have the majority of governors across the states. And don’t forget the Supreme Court… it is likely a few very conservative justices will be appointed in the next few years and will become the majority.
It is very interesting to see the pendulum swing back to the right. We have had 8 years of very liberal policies in place, probably enough to start tipping the scales back in the other direction. Very interesting indeed.
I’m just happy the election is over so we can get back to our regular lives! Good luck with your employment hunt. :)
I can’t believe it. I was very surprised at the result. I had thought the market would drop dramatically on a Trump victory due to shock and surprise. It didn’t quite work out that way thankfully. The futures did drop overnight but came back and then the market went UP. Wow.
It is times like this though that make me glad that I am a patient, slow, and long-term investor. Blips like this just don’t matter. We’ll have many presidents over the next 40 years.
Don’t move to Canada people! Think about why people felt like they had to vote for someone like Trump. Its an interesting thing to consider.
Female, minority, non-Trump voter here. I, too, was stunned by the election results. And I agree with you, don’t move to Canada. Move to Mexico! Great weather, low cost of living, and think of the benefits that would accrue to that nation by virtue of an influx of highly skilled, well-educated go-getters. Ask not what your new country can do for you — ask what you can do for your new country!
The election results were devastating, can’t believe everyone here is simply gloating about bit lower taxes and putting a fascist, racist, sexist demagogue to the highest office. I am a minority woman and I feel incredibly sad and afraid of what the future holds with complete GOP control at every level of government without any practical checks and bounds in place. They can enact all their crazy plans, my elder sister will loose their insurance coverage due to pre-existing conditions when ACA is repealed. Roe vs wade will be overturned, if I have unplanned pregnany, what are my options? Go back for a back alley abortion and put my life at risk? We can obviously forget about any parental leave and childcare policies for good. We are back to the 50s and women should forget abour career advances, so incredibly financially liberating!! Obviously most male commenters here will never have to deal with this, you can enjoy your 6% tax break. And just to be clear, I am a high earner as well, but still disgusted and angry at what this win means for anyone not white and male. FS I am disappointed at your very one sided analysis here. Trump voters cannot be excused for ignoring his horrible sexist record and giving him a free pass just so they can have low taxes. Ones who do that are sexist jerks themselves, no hiding away from it.
What I realized all these years is that we must learn to accept those things we cannot control and work our hardest to improve those things we can control.
If we dwell on the past, we will end up being miserable. Try to look on the bright side of things and move forward. You will find greater happiness this way.
I refuse to let being a minority in America negatively affect my lifestyle. Instead, I will cherish my differences and work hard to provide the best life so possible for me and my family.
Sam, some of us can’t control whether being a minority in America negatively effects our lifestyle. That control has been stripped from us and no one has our back.
Sometimes, the things we cannot control will harm us the most. People in Syria could focus on the things they can control, escape the country, choose to live there and fight, but I would think not even you would consider theirs a situation where self control can offset the reality of their country being reduced to rubble and their families being killed.
Having the right to control your own body taken away from you is such a frightening prospect, that we, women, can be excused from feeling scared.
Since Texas introduced their draconian rules for abortion, the pregnancy related deaths doubled. A repeal of Roe vs Wade could make this the new reality all over the US.
Making more money does not sweeten the deal when you know that your like might be in danger. Money did not save jews in Germany, in fact, money made them the target.
What are your thoughts about moving to a blue state if you are planning on having an abortion? Do you feel that America may turn into Nazi Germany now?
I’d think the easiest thing for people who dislike Republican rule is to move to states that voted majority Democrat according to the map.
I don’t think I would move to a blue state in order to have an abortion. I would move to a blue state because I need to have my dignity respected. Having somebody else decide what they will do to my body is not acceptable to me. Pregancy and it’s result should not be left up to the state, because the state will obviously NOT suffer the consequences.
I believe that the people that surround Mr Trump will have a great impact on his policies. Mike Pence, his vice-president is staunchly anti-abortion. I’m looking forward to see whom he will appoint next, and that will probably tell us a lot about his term in office.
Also: https://edition.cnn.com/2016/11/10/us/post-election-hate-crimes-and-fears-trnd/index.html
Ok, so what are some of the actions you plan to take now? I definitely Believe in a woman’s right to choose. Although past a certain number of weeks, things get very very difficult.
I’m entering politics as of today. Taking action, as you say.
Awesome! I wish you good luck in trying to enact the change you want to see in the world.
Definitely an EXCELLENT time to start an online business. Thanks for your encouraging email!
5 years out of the workforce and trying to get back in does sound challenging. Will be interesting to see how that works out. Do share. Would you take a job out of state?
Alternatively building more products is also an excellent path too.
P.S. It’s not freezing 5 mths of the year everywhere in Canada, but the Pacific NW does get depressingly rainy and cloudy like Seattle and Portland. Eg it rained 2 weeks straight before a little sunlight came out for 2 hours and everyone took pictures in downtown haha.
I have to agree there are more career opportunities in LA/NY. Also notable is the entire country’s population of Canada is 35MM vs the state of California is 38MM. Large land mass for the former, but most people just huddle around Toronto, Vancouver, and Montreal.
The polls were way off but I can see why. All the Trump supporters I know are closeted. I supported him shortly after his announcement and have no problem being open about it. I live near Seattle where they think all Trump supporters are Nazis, but after I opened up coworkers and friends also revealed they were supporters. Nobody wants to feel ostracized or be grouped in a bucket of deplorables so they keep it to themselves except when they vote.
Anyway, I am positive about the long term changes. Short term there might be a market pullback which presents a good buying opportunity. Long term I look forward to less military adventurism, cheaper health care premiums, tax savings, and other things. I am hoping we can put a dent in the billion dollar lobbying industry as well.
Looks like the business has to be something other than an LLC or partnership though?
I’m pretty excited about these lower tax rates. Interestingly, I like you, assumed that Hillary Clinton would win. Psychologically, because of that, I thought it would be best to make as much money as I can now because taxes will be going up with Hillary Clinton.
However, now I feel more motivated to grow my income because otherwise, I will have paid all this tax at a higher rate for nothing and current high earners will be at an advantage over me.
It is strange actually how much of a psychological impact this was for me that I didn’t even realize.
The majority of my income has been in the 39.6% bracket for the past few years.
If you’re looking to take advantage of the potential changes to gas regulations and get a full time job at the same time, you should check out Booster Fuels. We’re in the Bay Area, we’re hiring, and we love FS :)
Thanks Valeri! Could be good! Thanks for the offer.
Well for the rest of the non politically interested folks out there like me!! :) Im just going to keep doing what I have been doing. Investing, being frugal and trying to reach financial independence.
As a non-american I’m just glad this election is over. People from all around the world are going crazy on Twitter etc. They forget that working and continued learning is a garantee for succes no matter who lives in the White House. Focus on yourself – it is the only thing you can control.
Amen!
You mention 200k as the sweet spot for a single earner, with a 25% tax rate. But the tax plan states that “brackets for single filers are half the amount.”
As a single filer, I took that to mean that the maximum income for 25% tax rate is around 112k.
Am I misunderstanding?
Aaron, I need to go and clarify this tax proposal because I know that the Republican Party has been adamant on not raising income taxes for any income group. It wouldn’t make sense to raise ones tax rate by a person who is earning $125,000.
I supported him the day he started running, and had no doubts he would win.
Hey, Sam, I think there’s a mistake in your math here:
“The sweet spot for maximum happiness continues to be an individual income of around $200,000 a year (25% tax rate).”
If Trump’s tax plan puts the rates at 25% for married couples up to $225k, and if the single limits are half that, then for individuals the cap is $112,500 to be in the 25% bracket. As a single taxpayer with income in the high $100,000 range, my tax rate is actually going to go UP to 33%.
Not that I’m expecting anyone to cry for me about it, but I’m just saying, this tax plan isn’t saving me any money. It’s going to cost me quite a bit, I think. I’m really trying to think of the potential positives of a Trump presidency, and I’ve come up with a few (much to my own surprise), but there are still sooooo many negatives that it’s going to take me a while to come out of this funk.
You might be right. I wrote this article at 3 AM in the morning and I need to look further into one half actually means. Because I know for a fact that the Republican Party will not be raising taxes, therefore, in your example, you shouldn’t see a massive tax increase at all.
Oh man, 3 am writing. Of course that makes sense since you got this article out RIGHT after the election results. Sorry, man, I didn’t mean to shove a stick in your eye after you did all that late-night work. It’s still a great post overall.
Unfortunately, I think I’m right about the math, though. See: https://www.forbes.com/sites/anthonynitti/2016/11/09/president-trump-what-does-it-mean-for-your-tax-bill/#501337224b8b
Trump’s tax plan said that it would reduce taxes across the board, meaning that every tax bracket would be seeing a tax cut. But that’s just an average of the people in those brackets; it doesn’t mean every taxpayer within those brackets is seeing a cut. In this case, because he changed the single/married bracket cutoffs to their previous 1:2 ratio, the high income earner singles are going to feel a hit when they’re moved up from the 28% bracket to the 33% for every dollar above the $112.5k cutoff. For me, it’s going to cost me about $3,375 per year more than before. Not the end of the world, but there it is.
No worries. I’m surprised more personal finance sites haven’t published their thoughts.
Jumping to a 33% marginal federal tax rate for those making $112,500 or higher is pretty surprising compared to those paying 28% between $91,000 – $190,000. I really can’t imagine it happening.
Best to get married and have one spouse not work, and one spouse make $225,000 then!
Related: At What Income Levels Does The Marriage Penalty Tax Kick In?
Yeah that jump to 33% is really going to suck. Getting married wouldn’t change my tax situation as I would have to do married filing separately. My student loans are a % of my income, with extra going towards them of course, but it wouldn’t unfair to expect a spouse to also pay 15% of their gross income towards my debt. Therefore I have to stay “single”. So much for tax breaks for the middle class!
What website did you get the 18-25 demographic from? Looking to check it out and share it with some people.
The silver lining for those of us seeking financial freedom, as you’ve suggested, is his tax plan (with the exception of taxing carried interest as ordinary income – that doesn’t jive with the rest of his plan). In particular, I’m glad that he’s willing to address the extremely high cost of childcare through the tax code (much thanks to his daughter). Like you, I’m inclined to work harder now (laffer curve in action), but I know some of my peers who are compensated through carried interest feel otherwise.
I never thought he’d win, and if he did win, I thought the markets would crash, but it seems my ability to make predictions is quite terrible!
Same here, I was ready to make money on gold and short positions in this situation, but didn’t happen. We’ll see what happens, thanks Obamacare for letting me mooch until age 26.
What’s funny is that I was right, but wrong where it counted.
I knew that Donald Trump would win.
And I thought I knew that stocks would drop like a rock. I bought a bunch of SPY puts and was licking my chops when I saw futures down 5%.
Morning comes and NOTHING. Didn’t win on my bet.
Whats hilarious is that when futures were down 5% I was saying “Man wish I could go back in time and bet the house on SPY puts”…
Glad I don’t have a time machine!
This was a good experience for me because it reinforced that even if you know what will happen, the market may react completely different.
My next prediction: I see the fed raising rates in December, combined with Donald Trump angst it will fuel a similar drop to what we saw in the beginning of 2016. Don’t know how I will play this yet. I will probably buy some gold calls early November.
This is all in my play money account so its not a big deal. I am however up 400% since 2015.
Fun times ahead. Go America. Let’s be great again!!!
I was watching the Futures like a hawk too, since I was up until 3am PST to write this post!
If you are up 400% since 2015, I presume you don’t work? What type of dollar amount is that? Hope it is huge!
Don’t move to Canada. Move to a swing state!
I really didn’t think it would be possible for Trump to get elected. It’s still a shock to me. I was also super nervous watching the futures last night. I’m glad the stock market is relatively flat today. It will be interesting to watch for sure over the coming months and years.
Interesting thought process on wanting to work more with a Trump presidency. I think you’ll be much happier picking up extra consulting jobs versus going back to work fulltime!
Once the euphoria or depression wears off from American citizens, things should get back to normal like they usually do. We are not in a dictatorship so the effect won’t be as bad as people say. But there will be changes and the smart people will be able to adjust to those changes and look for any new opportunities.
Great post Sam!
“They’ve got some of the most unaffordable real estate in the world, high-paying jobs are not plentiful, and you’ll be freezing for five months a year.”
Ok, Sam now those are friendly fighting words! As I’ve continuously been telling my wife over the last 18 months of watching your election, and particularly over the last 18 hours – America is a great country full of great people just like Canada and you all have a chance of doing the right thing most of the time. America is far from perfect and your new President-elect will not easily solve your major problems or even stay out of trouble, but neither may have his opponents or rivals. I would say exactly the same about Canada and our politics (our last Prime Minister was thrown out brutally in the last election will a similar wave of across the country, to the centre of the political spectrum in our case).
If we all stick to strong basic values which underlie our peaceful democracies, the longest undefended border in the world, the biggest global trading relationship, etc, we welcome you with open arms. Bring your Canada Goose parkas.
While you don’t have to move here to enjoy Canada’s support, several of my US colleagues did ask me about it this morning.
Good stuff. Somehow, I strongly believe we Americans are NOT really welcome in Canada. We’re loud, obnoxious, and will drive up the cost of everything. Time to defend your borders from us!
I get the cost issues with Obamacare, but what is the option to fix it? Would rules against blocking insurance for people with preexisting conditions (ie cancer) be allowed to exist again? That’s my biggest concern, as my dad is a cancer survivor who has to take preventative medication for life and that Obamacare rule has really helped him.
I think the problem is the status quo before Obamacare wasn’t working, and something has to change. I’d be curious to know what your suggestion would be to fix it so that low-to-middle income folks can afford health insurance that actually covers things that need to be covered. Hospital costs and drug costs are rising too high and insurance companies will increasingly become more restrictive in what drugs they cover and what hospitals they consider in-network (and increase what your out-of-pocket will be).
I hope those w/ preexisting conditions can still get AFFORDABLE care. The issue is, if you are not poor and don’t have employer subsidized, healthcare since ACA passed is becoming extremely UNAFFORDABLE. Most people just don’t know b/c they don’t pay full premium. I do, and the cost is ridiculous.
Sam,
Great analysis. Market appears to have stabilized at the time of writing (although the down was down around 750 points last night).
Luckily like you, my portfolio is positioned nicely to take advantage of any market volatility. Also, my gold holdings should do well in the near term given the Trump uncertainty. Will be very interesting to see where the market moves over the next month…
Dang, I was all ready to buy the dip this morning and there’s no real dip. I was licking my chops hearing about Dow futures being down 700-800 points last night. AMT going away would be huge for me (assuming I can mostly replace my salary after negotiating a severance earlier this year). I live in a state with high property taxes and moderately high income taxes, so it’s a real PITA for me not to be able to deduct any of that under AMT. I do find the Europe map a little ironic with Hungary being the only “red state” – isn’t that where George Soros is from?
LOL, I think you are right! I thought the map was funny, so I put it in. It’s always interesting to learn new things w/ pictures.
This no AMT thing will be huge if real. I think I pay like $8K-$12K a year in AMT. If that goes away, I’m going to Disney Land!
Yep, $8k-$12k is right in the range of what AMT has been costing me, too. Might be more with my generous severance package this year! By the way, your severance book was very helpful to me in maximizing my exit – keep up the good work.
Always great to hear the book has helped! Thanks for purchasing.
You writing this post saved me from having to do it. :)
I can also relate on the job thing… Having sold my company two and a half years ago, I suspect companies will look at my resume and see “Founder and CEO” for 18 years and likely balk at hiring me. Perhaps I’ll just focus on the advisory roles… and maybe a little bit of UpWork stuff.
Something I wonder now though… those of us with an LLC with S-Corp election… if corporate rates drop to 15% it would be interesting to do some analysis of the best business structure in different scenarios. Of course a C-corp has double taxation, but it also has a lot of ways to minimize that issue.
Yeah, sorry buddy, you are unemployable w/ Founder and CEO title now! But, congrats on selling your company. Did you get big bucks? Was it the right time? Or do you miss it?
I’ve taken the mindset w/ my company to hold on to it for as long as possible b/c of our low interest rate environment and its high margins.
Yeah, it was a decent exit – basic living expenses are covered for the next 50+ years. :)
It was indeed the right time. I ran a managed cloud services company for 18 years, so with the recent (starting ~5 years ago) focus from Amazon, Google, and Microsoft on low-cost mass-market cloud, I got out at a good time. Too much longer might have destroyed some value.
I do miss it though. Well, I miss the people, and the challenges, but I don’t miss the 80 hours per week nor the 24×7 on-call of being a tech CEO. To “get over that” now I advise other business owners on how to maximize the value of their ventures, both short term and if they want to position for a sale. Of course I also do some personal finance stuff over at MYM.
If you are still growing steadily, then it sounds like a great idea to hold on to it. Once growth starts to slow, or plateau, its often time to at least consider an exit plan.
If you are actually concerned, why not just put your title as VP Sales or something related to the job you actually did? Employers are always interested in senior level talent with a proven track record.
Because it’s deceiving. I wouldn’t even call that a gray area – it would be a lie that I’m not comfortable with. Obviously I can, and would (and do), focus communication on the skills that are appropriate for the role, but while still be honest in the position held.
The white working class voters are placing too much faith in Trump. They honestly and genuinely believe he will bring their jobs back. They believe he will bring back coal, oil, manufacturing, steel… all of those rust belt jobs that have disappeared.
It will never happen.
Energy companies are shutting down coal plants, too expensive and dirty, in favor of cheap natural gas of which the US is the top supplier (my FIL works for a huge energy company and this will not change). No amount of EPA deregulation will bring that demand back.
Rock bottom Oil prices are the reason why the Oil jobs have disappeared (I have family members that work in the fields that posted last night to make Oil Fields Great Again and get us pumping again, the president has no control over Oil companies and oil prices (cheap gas now, thanks Obama!)).
Manufacturing jobs have disappeared due to technology, automation, cost cutting and efficiency improvements (this is my area of expertise and I’ve personally been a part of the push for manufacturing improvements). Some outsourcing contributed, but no where near as much as anyone would think. In fact, some outsourcing is considered “offset”… Countries demand a certain % of work in exchange for purchasing high dollar goods (aircraft, construction equipment). This offset will only increase and there is no stopping it. You either comply, or they go to your competitor.
Steel jobs were replaced with super efficient/automated plants and cheap Chinese steel.
I can’t help but feel like all of these disenfranchised white working class voters have been sold a bill of goods, but it was exactly what they wanted to hear. They wanted to go back to the way things were. They didn’t buy Clinton’s job retraining ideas, and venturing into new areas. They want their old jobs back, and it will never happen.
You are probably right the old jobs will never return due to globalization and technology. It’s hard to w/ our cost structure.
The best business to run right now is an internet-related business where you can TAKE ADVANTAGE of global internet penetration rising and low costs.
I really hope more people decide to start their own website, build a brand online, and get serious about a side business or main business.
Think you’d be surprised how many might come back with a trade tariffs on China combined with a corporate tax reduction from 35% to 15% and significantly less regulations. In the last 15 years, China added 40 million mfc jobs while the US lost 6 million. It’s unlikely we add all 6 million back but we might get 3 million – plus the tax base would be in the US rather than in China for both the wages and the production. Combine that with wage pressure from significantly less illegal immigration and you should see real wage growth for the bottom 50% of Americans for the first time since the 80s.
The Europe map looks very similar to the map in 1980, Reagan’s first term. Just as in 1980, none of them had a vote in the US election.
10 Year is close to 2%. Do you plan to buy big on REITs, real estate and bonds as you previously stated in your post? Does the Trump candidacy change your view on long-term low risk free rate?
Absolutely. I was nibbling at some positions (1-5% positions), now I’ve deployed a 25% position today 11/9/2016 as the 10-year is at 2.1%. I’m surprised by today’s market action in the market, and I’m thankful the Dow/S&P500 is not down 5% as the futures indicated.
I AM very excited to have marginally higher rates so that I can replace my CD income with other assets that can produce a decent yield.
As always, the market reaction will be interesting. The argument for higher stocks and rates near term also has merit. The Trump victory plus a sweep of the House and Senate opens the door for de-regulation/lower taxes (stocks are already coming back this morning) and massive fiscal stimulus (higher rates – 10y UST approaching 2% this morning….0.10% higher than yesterday).
I’m shocked the 10-year is almost at 2%. But, that is also a good sign the market believes the economic recovery will continue. I’m a buyer of bonds at 2% 10Y UST, although we were at 2.35% earlier this year. So it’s all about various levels to look out for and build the bond portfolio I’ve been waiting to build for a while.
Interesting you mentioned bonds. Some news overnight was that Trump’s policies are inflationary. Prior to the US election results, 84% chance of a Dec hike. Fell to 50% when Trump won as markets risk-off and back to 82% now. PIMCO joining bandwagon expecting more Fed hikes in 2017 due to fiscal spending. Some banks beginning to recommend TIPS again with inflation in view.
Like yourself, I’ve been looking a bonds and I reckon for those who just want to keep pace with inflation (without any extra capital gains so as to keep things simple and have peace of mind), and assuming their spending is in line with inflation, TIPS and inflation protected bonds offer a great way to preserve capital and cashflows. While housing, property REITS and gold are also good inflation protectors, I find that they are subject to supply and demand forces that are uncorrelated with inflation, rendering them less effective as an inflation hedge. As an example, the projected rents are down 20% on my mum’s rental as the resource mining boom saw rental supply spike up.
Aside, if rates really do move up, don’t be surprised if you see more structured products coming back into the markets. The higher rates could mean more optionality can be purchased whilst maintaining principal protection.
I’m looking forward to seeing more structured products w/ protection AND yield. Those are the most desirable for my investment portfolio. So many no longer provided yield, and rates ROCKETING higher is finally going to allow for retirees to make a little more money!
Not sure if you have seen these. but could be worthwhile asking your banker.
These are interest rate linked principal protected structures.
For example purposes only, Principal Protected Daily Range Accruals 5%p.a. for 5years, Quarterly Call (non-callable first 3months).
These use a range on a benchmark eg 3month LIBOR eg 0-3% for example. Each day that 3month LIBOR stays between the range, you accrue one day’s worth of interest. The issuer can call back each quarterly coupon, after the first coupon is paid, and you will be repaid principal and any outstanding interest. If you’re able to stagger the ranges (eg 0-3% Yr 1, 0.5-3.5% Yr 2 etc), then this could be more ideal incase interest rates spike. These are principal protected if held to maturity.
The other interesting one is a Bull Steepener. This takes a view on the steepness for the yield curve. For example, if the 10yr Swaps – 2yr Swaps stays within a certain range, then you get paid your coupon. These can be structured with daily observation (as per earlier example) or with a monthly or quarterly observation. These are also typically principal protected.
As the variations in structured products are limitless, you can create almost anything. The trick is that there is always a catch and to understand the fine print.
I think it’s wise for you to start looking for full-time employment. I think the days of depending on the stock market gains to increase net worth and provide income is over. At least in the medium-term (2-4 years), we should all strive for some stable and dependable income. Best of luck to you and to all of us. I’m still dumb-founded by the results!!
I can’t see the problem here for business and the markets. What’s not to like about Trump? He’s a billionaire, a red blooded capitalist, he’s proud of the fact he dodges taxes, says what he thinks and, clearly, has an appeal to a variety of American consumers. You might not like the brand, but many obviously do. What do I think will happen? Absolutely nothing. The most astute comment I read was that America will be better off with this clown today because, if he hadn’t got in, the one coming tomorrow would be bringing something really to worry about. In the UK it’s the same thing. Get out of Europe now before it goes up in flames and, by doing so, hopefully send the Eurocrats a signal that they better start listening to what life is like for the majority of their citizens. I’m not holding my breath all the same. Italy will be next to go. Why? Because of the tragedy happening every day that’s washing up on their shores. And what is Brussels doing about that? Anything but address it. First Brexit, now Trump, and next …. what rough beast slouches toward Bethlehem to be born?
Let’s hope you are right! So far, the markets concur and Trumps victory speech was quite calming.
It’s not that cold up here :)
Don’t lie! hahaha.
I’m shocked by the outcome, but the only thing to do is move on. I’m continuing to invest regularly through the volatility and hope for the best!
I still can’t believe the outcome. As you said, it seems that Clinton had too many trust issues for voters to get over. I expect to see a huge sell off in the short-term. While it’s always difficult to see the value of your portfolio shrink, I will be taking advantage of the sale on stocks. In the long-term, the market will be just fine. We’ll just have to wait and see if the market recovers quickly like after Brexit, or if it takes a little longer.
We will be buying on regular schedules and throwing any other cash I have sitting in as this plays out.
I didn’t hedge against the election at all because I don’t trust myself to get any sort of timing right
No Canada for this family – but Australia does sound nice
One of us! One of us! Like Tristan said, beware of travelling by boat….
I think the market will be irrational today with sellers, but will bounce back similar to Brexit. Should be a good buying opportunity, but my guess is more choppiness until we figure out Trumps agenda. I agree, his victory speech sounded very calming and reassuring…and I see this morning that Putin is open to improved dialogue. It will be interesting to see how this stuff shakes out, but just like you and the polls I was completely caught off-guard. Quite a movement, no doubt.
I’m curious to your point about the blue states seeing the most employment growth, property price appreciation and wealth creation though…I don’t think it has been bad in many of the red states. I live in Charlotte and I know that market has been hot along with a number of other red states. Seems to be a little too much of a broad brush statement.
Everything is relative. I wrote “some of the most.” Washington, Oregon, California, New York, Nevada, CT real estate has been EN FUEGO! NC is doing well, and is a place I was actually looking at to buy property in Raleigh via crowdsourcing (was doing due diligence this weekend).
The South traditionally votes Republican, does it not?
Yeah the traditional deep red and deep blue states (CA, WA, NY) remained red and blue, not because the blue states have seen wealth creation and don’t want to see change to affect it. It’s just simply tradition.
I’m not originally from NC and I’m not trying to represent anything there, just pointing out one example that I see everyday.
Great post. It’s been all doom-and-gloom but I did my part by voting and this is what our country has decided, so in either case… it’s time to make some money. I am not letting myself on Facebook today because the posts just enrage me (whether for or against, I’m just so over it).
FS, let me know if you’re ever in Raleigh!! I’m 10 minutes from downtown and have lived here all my life. I also am in real estate and have owned rental property since college. Would be so awesome to grab a drink with you!
Though disappointed, I wasn’t surprised that Trump won (I mean the U.S. public did vote a warmonger like Bush, the son, in TWICE!).
Although he’s won, I don’t think there’s grounds for worldwide panic. At least he won’t be dragging the US into other countries businesses and creating wars and generally worsening the world for the rest of us. He’ll probably stick to keeping the BS in the US.
I doubt he’s going to build that wall or succeed in evicting all brown/muslim people from the US. Or achieve much of anything for that matter (including bettering the lives of the general white population which I’ve assumed voted him in).
I do think he will tow the party line which means women/minorities are going to be a huge target of the republican agenda. I think racial dissension (blatant outright racism) will peak, Roe vs Wade will be overturned and Obamacare is going to be shut down with devastating consequences for the less fortunate.
Lol, I always considered my country as a third world back woods which would never be beaten to the bottom of the government pool. Yes, there’s gross incompetence, massive corruption and outrageous crime but at least (when we poke our govt. with a big stick) they try to better our lives in miniscule ways.
They take racism seriously, we have free primary healthcare (which includes pregnancy prevention; abortion, BCPs and condoms), and govt. grants for the less fortunate.
Thanks Trump for making me feel better about my country! ;)
Roe wasn’t overturned even with 7 (out of 9) Bush I, II and Reagan Supreme court justices and Trump is definitely less socially conservative than those 3 were. It won’t be overturned under Trump either. And even if it does get overturned, it doesn’t make it illegal. It just turns it back to the states to choose for themselves, which is how it should be per the 10th amendment. As far as race, in 2008/09, nearly 70% of the US said race relations were good. In the last 2 years that has plummeted to below 30%. I don’t think it could get any worse than the division Obama did the last couple of years. What do you think Trump, exactly is going to do to women or minorities that are here legally? Maybe remove some affirmative action for federal hires but that would be a good thing IMO. Job hiring and promotions should be color blind. My guess is the wall does get built and they try to deport all illegals with criminal records.
We’ve had 40 years now where globalist have been in power with virtually all of the gains going to the top 5% and the large cities on the coasts. It’s time to get a nation first agenda a chance. If it doesn’t work, no doubt he’ll get blown out in 4 years. At the very least, its unlikely we’ll be going to wars anytime soon.
Well I don’t think Trump himself will do anything, I don’t think he has much of a brain and is weak willed. I think his republican underlings will do all the thinking and he’ll just sign on the dotted line.
I think abortion will be made illegal. Even if it isn’t, all the clinics will be forcibly closed down. At the end of the day it means the same thing, abortion isn’t available to women.
I also think that the LGBQT folk are going to have to forget about same sex marriage.
I think the self entitled, blame-it-on-everyone-else-but-ourselves white majority are going to pissed when they see nothing is improving and will again blame minorities and vote Trump in a second time, which in turn will give the republican underlings more time, and money to screw with the general American population.
I know what I’m talking about because that’s what’s happening here. The majority still can’t make a living because the powers that be are stealing tax money instead of performing civic duties. And guess who are blamed? Foreigners and minorities who are “stealing” the majorities livelihood (sound familiar?), that have all the money and must give back the land.
People are people and whenever one section especially the majority feel disempowered, they resort to violent acts on whoever they feel is disempowering them instead of demanding that the politicians do their jobs and stop laying blame elsewhere and build the country up.
Believe you me, I would be the happiest if Americans focused on improving their homeland and that the Trump years are the most glorious “nation first” focused years because it means that third world countries like mine will no longer be of interest and not be bullied by the almighty US.
But I really don’t see that happening, not with him and the republicans at the helm. I do sincerely hope I am wrong.
#1) The Republican presidents are dumb meme has been played out at this point. Democrats and the media have done it every single election since 1980. It’s one of the reasons you lost this election. Trump beat the best slate of Republican candidates ever fielded – 16 others to be exact. He beat the anointed candidate. He beat the media. He beat the DNC. He beat the RNC. He beat the GOTV Obama/HRC coalition. He beat corporate America. Oh, and did I mention he did this while spending just 30% of what Hillary and her PAC’s did? Finally, the guy is a multi-billionaire and yes he did inherit some money but he’s done quite well with the money he inherited (most gen 2 & gen 3 blow it all – read the millionaire next door for more info). If anything, the man is a genius.
#2) Trump already said he isn’t going to revisit the gay marriage ruling on national TV Sunday night. Trump is not a social conservative. Why do you think the religious right backed Cruz in the primary?
#3) Overturning Roe vs Wade doesn’t make abortion illegal. It simply sends it back to the states to decide for themselves. And I really doubt Roe is overturned anyway.
#4) Federal dollars for abortions may be eliminated, but they will not be shutting down clinics (individual states might).
#5) Call it whatever you want, but the median household income hasn’t moved in 30 years and the lower half has done even worse than that while corporate America and the top 10% – which I am a part of – have done fantastically well. They (lower half) have received massive wage pressure from “free trade” with third world countries and with 15-20 million illegal immigrants that put downward pressure on wages. In the last 15 years, the US has lost 6 million mfc jobs and China has added 40 million. We have a ~350-400 billion a year trade deficit with China. How is that a good deal for the USA? Chris Matthews said it perfectly on MSNBC the other day (re: immigration and trade): Democrats wanted the votes and Republicans wanted the cheap labor.
https://www.youtube.com/watch?v=MXxGPDBRUzs
Lol, dude did you not even read my comment? I didn’t lose any elections because I’m NOT a democrat and NOT a US citizen! I’m from Africa!
I don’t view the biased American media so I haven’t been following either candidates empty promises. I read a variety of international media and the opinion I’ve formed on him and his leadership capabilities is based on a variety of sources, my life experiences, independent write-ups of his business ventures and his show the Apprentice (which I loved!).
Like I said before, I sincerely hope I’m wrong about Trump and you’re right and he turns out to be this magnanimous nation builder. Why? Because the world has shrunk and what happens in the US, Europe, Asia and Australia sends tidal waves to the rest of us.
But I remain sceptical about Trump as a nation builder. People that believe in divisions at their core can never ever have nation building in mind and can never ever successfully build a nation.
As I said before, the mass hysteria that the media is churning out is completely unfounded. The people of this planet have survived numerous wars and years of oppression.
I know we’ll survive the Trump administration because it’s going to be a quiet one since, my friend, you’ve convinced me he won’t revisit gay marriage and abortion won’t be made illegal which is mostly why I was disappointed in him being elected (I had very little faith that EITHER candidate could rebuild the US economy). I think the one blip in his term will be that wall you say he will build and bill the Mexican government.
Again the one positive thing about him is that he is much less likely to start/support any more wars compared to Hilary.
(On a side note: I must say Americans have always come across as quite rude, brash and flippant when communicating over the internet but this last election seems have driven everyone into a foaming-at-the-mouth, my-opinion-is-right-so-I’m-going-to-shove-it-down-your-throat-because-your-opinion-is-clearly-wrong commentator who’s ready to defend their candidate to the death. They’re just ambitious politicians, people and they certainly aren’t deserving of undying loyalty and support!)
Although I’m not from the US (Hungary actually), I think people overestimate the effect the administration has on their success or failure. unless you are in a dictatorship, you should get the opportunities, and your success will to a much higher degree depend on your individual actions, rather than what administration is in place at the time.
It’s funny you are in Hungary, the one country in the Euro map I highlighted that prefers Trump!
I fully agree about controlling what you can control. Create your own destiny!
Well, I’m not sure the country supports Trump, our PM certainly does :) Probably a couple of years ago I would have complained if I thought some circumstance was unfavorable to me. I have completely turned around since, and fully believe that I have the most control over my life. I have this blog among others to thank for this.
I love your outlook on life!
Hah! As a long time member of the bureaucracy, changing the captain effects the course of the ship, but doesn’t really change the ship itself. Most of the crew remains the same and tradition is difficult to overcome.
I agree with your statements, Balazs!
How do I feel? Confused. Uncertain. Privileged. I say the last word because my initial thoughts last night as the votes were coming in were of the stock market and other things related to finance.
Your last paragraph has me smiling so hard. It’s really awesome to read posts like this that are so full of perspective. I’m really glad you didn’t just say that it doesn’t matter or everything is fine for everyone.
Glad I made you smile. It’s fun to be introspective during times like these. Perhaps in several years I’ll read this post and think to myself, “What was I thinking?!!” :)
I have some dividends and one stock I sold recently that I need to reinvest. I’m not much of a market timer as I prefer passive investing, but I will take advantage of any short term drop to throw that excess in over the next few days. I don’t expect the drop to last nor do I expect there to be a massive change from the status quo other then ACA might be toast. I could be wrong but filibuster still exists and a functional congress hasn’t existed in my lifetime. I’ll believe the tax cuts when I see it.
I can’t see tax cuts not happening w/ Republicans controlling everything. The tax cuts aren’t very drastic if you believe Trump’s plan as highlighted in my post.
ACA is crazy expensive for most people. Prohibitive, really.
Time to move to Australia everyone! Just don’t come by boat and you should get in :)
I think it’s not going to be as bad is Hillary supporters are fearing, but not as good as Trump supporters are thinking.
The more stocks go down, the bigger opportunity that presents. Time to get the checkbook ready. If we had cash, we’d be buying (/ready to buy). But we’re going through IVF, so that’s the most important thing for us at the moment.
Tristan
I STILL haven’t visited Australia. Which parts would you recommend?
IVF costs $12,000 – $20,000 per session here in the US w/out insurance. How much does it cost there? Best of luck to you on the process!!!
See: https://www.financialsamurai.com/how-much-does-ivf-cost-discussion-on-infertility/
You should definitely come, probably over 2 or 3 trips :)
Experiencing Sydney, Melbourne and Gold Coast as cities is good – 2 or 3 days in each at least. Each offers something different and offers the different sides to Australian culture.
Outside of that – Sydney’s Blue Mountains, Uluru, The Great Ocean Road (roadtrip), Great Barrier Reef, Whitsundays, Cairns, Tasmania are all worth a visit.
Don’t forget New Zealand too, particularly the South Island’s Queenstown and Milford Sound.
IVF costs about $12k a pop here (before Govt refunds). I don’t like thinking about what that would compound into over 25 years.
Tristan
How soon will the stock market go back to norm?
I expect a Brexit-like sell off today.
I’ m not sure you want to go back to being a full time employee. Life is better as a freelancer!
I DON’T want to go back to being a full-time employee. But man…. seeing a top federal marginal income tax rate go from a brutal 39.6% down to 33% is just so enticing! I feel like a moth to a flame. Further, this Corporate Income tax thing dropping to 15% from 35%… I don’t quite understand how that works b/c as an S-Corp, the income is passed through and you pay based on income tax rats. Will need to do some due diligence w/ my company if this happens!
I think as an S-Corp, you wouldn’t get any advantage due to the drop in corporate income tax rates. You have to be a C-corp and retain earnings at the corporate level to see any advantage there. You could always flip to a C-corp if you wanted to, though.
it’s only about a 16.6% drop if you think about it, and to get it you would have to make quite a bit of salary. you are in SF though with experience with high salaries so maybe you would get it though, but it is still IMO does not justify going back to work full time. it would be better to focus your efforts getting the more than 50% decrease in business (uhm, this site) tax rates. plus, more freedom. i wish i had something like this going for me
Honestly, that drop in the top tax rate really isn’t that much. 33% is still ridiculously high. The government gets a third of everything you make? How is that reasonable? Even the 25% rate you suggest is crippling. Trust me, that’s my tax bracket and I watch the bulk of my paycheck each week just vanish. Anything over 10% is unreasonably in my opinion, regardless of your income.
I’d say to avoid full time work, but honestly it’s probably better when you’re financially free and do t have to worry about getting fired because your expenses are all covered. I bet I’d love every minute of my job if getting fired wouldn’t mean the crippling of my financial well being. So what the hell, go for it!
Sincerely,
ARB–Angry Retail Banker
Even if you don’t find a full time job right away I’m sure you can freelance or do full time consulting in the meantime. :) As for the election, that was a really exciting process to watch. I bet the dating app MapleMatch, which pairs Canadian and American singles, will see a lot of business now, lol. I purchased some gold right before the election thinking it probably won’t drop much if Clinton wins. But it would go up disproportionately more if Trump wins, which is luckily what happened. It was a trade that had low downside risk, but high upside potential. I now plan to sell my new gold in the next few days and pick up some cheaper dividend stocks to hold until retirement. It’s funny that Canada’s immigration site crashed late yesterday because of too much traffic, haha.
Canada property prices might surge again, or be saved if Americans downstairs actually relocate upstairs! But, you and I know it’s mostly rhetoric.
I’m glad the stock market is FLAT and Trump’s words sounded assuring.