The biggest presidential election of our life is fast approaching. And if you watch the cable news, you might feel the plight of all is at stake, from our environment to our economy to our health.
But as I’m going to show you today, elections have virtually no impact on my stock selection process. It may surprise you. You may even think that I am stupid for ignoring the election. But here’s the problem: Politics and investing don’t mix
If you’re like most people, you have a political bias. And when you have a ‘horse in the race’ you are more emotionally invested in the outcome. When emotions seep into your decision-making process, you have a problem. Emotions blur the line between what you want and what is most likely to happen, which can cost you a lot of money.
Even if you can control your emotions, politics can end up costing you thousands of dollars. Indeed, while many political stories “feel” important, they are usually just “noise” that is virtually impossible to act on profitably. So, when making investment decisions, I suggest that you don’t play politics.
In this essay, I’ll show you how I let the price action guide my decisions, and I’ll give you one of my favorite megatrends that is sure to keep producing profits no matter who wins next Tuesday.
Successful traders take inspiration from the market
They analyze hundreds of charts every day. And examine the price action of stocks, bonds, commodities, interest rates and the VIX, aka “the fear index.”
This is because the price is objective. It doesn’t matter who you think will be the next President of the United States. Instead, it tells you what millions of market players are doing with their own money.
It’s MUCH more important than what I or anyone else thinks is going to happen. So none of my recent exchanges or recommendations are “bets” on the presidential election. Instead, I did what I’ve been doing all year.
I bet on megatrends
Megatrends are reshaping society. They have an impact on people all over the world. They take place over many years. And they are so big and important that nothing – not even a presidential election – can significantly change their course.
The internet, the “digitalization” of money and the hyper-growth of social media are some of the biggest megatrends of the past three decades. The actions leading these megatrends have generated incredible wealth. They have been among the most lucrative investments of the past decade.
Amazon (AMZN) has climbed 2273% since 2010, the digital currency Bitcoin has climbed 1324% in the last 4 years, Facebook (FB)is up 816% since its IPO in 2012.
Politics had no chance against these megatrends! This idea is also how we identified the massive opportunity to Snap (SNAP) back in january.
Back then, Snap was a hated action. It was the black sheep of social media actions. But we knew that Snap had quietly become a pioneer in augmented reality (AR). Last Wednesday, Snap climbed 30% after crushing its profits. It is now up 100% since January.
But focusing on megatrends is not only very profitable. It’s also a lot safer than you might think. Remember, megatrends have massive tailwinds working in their favor. They’re going to unfold regardless of whether there’s a Democrat or a Republican in the White House.
Solar stocks are a perfect example
The table below says it all. You watch the performance of the Invesco Solar ETF (TAN)—A fund that invests in a basket of solar stocks – since early 2019. It has skyrocketed almost 800% in just under two years. It is an incredible decision. After all, we are not talking about a small cap stock, or even a large stock. We’re talking about an entire industry!
Solar stocks have reached the moon even though President Trump hasn’t done much for green energy. In fact, Trump withdrew from the Paris climate agreement in 2017 and said he wanted to bring back coal jobs.
Speaking of coal, the death of dirty coal in the United States is an unstoppable megatrend that goes the other way. Below you will see the performance of the VanEck Vectors Coal ETF (KOL). It has fallen 57% since the start of 2018. Trump was never going to save coal. You would have wasted a lot of time if you were investing in coal stocks for political reasons.
This is why it is worth separating politics and investment
You’re much better off focusing on unstoppable megatrends like solar power, genomics, and advanced computing.
In fact, I’m incredibly optimistic about the long-term future of all of these trends. Stocks that are riding these trends have stood out lately. Many have rallied 300%, 400% or even 400% + since March.
So, wait for them to recover before taking a stand.
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