USA: Politics play an important role in determining the stocks value during election days. Some investors think that their stocks will sell off if their candidate loses. But here is one advice: Don’t invest your politics.
Although most investors handicap the election daily, wise investors should focus on long term long-trends that are supposed to continue no matter who will win and which party takes the White Bouse.
Here are some trends to consider and that will help you to choose wisely. These are:
Manufacturing is rising in the USA
Jobs in the area of manufacturing are returning to the USA, which will increase the employment rate also. Although the loss of jobs related to retail, entertainment, and travel is disastrous, the total impact on the country’s economy will be as comparable to the economy during the first decade of this century when US manufacturing jobs were sent out to China. According to the experts, approximately 2 million jobs were lost during that time.
US capital expenditure (CAPEX) is the money that companies put into plants, technology, and equipment. It declined when China joined the World Trade Organization. As China’s cost advantage began to recede, corporations started spending again. The spending was politically neutral as CAPEX was continued to rise in Barack Obama’s administration and Donald Trump‘s as well. Productivity has been rising. This trend has quickened and most likely to continue.
Technology is taking over every business
Various companies like McDonald’s Honeywell, Ecolab, and Walmart, etc are quickly digitalizing their business models. This trend is going on so fast. Working and shopping from home, online banking and payment methods, streaming and gaming, 5G, automobiles full of semiconductors, cloud, data aggregation, and cybersecurity will continue to experience powerful demand and sustainable growth.
The digital economy comprises of 9 percent of total GDP. More importantly, new Economy spending on software, tech equipment, research, and development has exceeded the old economy spending on structures and industrial and transportation equipment for the first time.
Global Purchase Manager Indices (PMI) continue to grow from 14 to 18 for September. This indicates the early stages of a new expansion and monthly numbers also indicate that this is the case. Also, a typical expansion lasts for almost eight years. Global PMIs are highly related to corporate profits. And this is the good news for all.
So, the next few months may be very unpredictable. Elections may have their impact, but these long terms will continue to grow despite the fact who will win.