The Capitalist Investor - Episode 31 Who is going to win the 2020 election? Will Trump be reelected? Or will Biden knock out the incumbent president? In this episode of The Capitalist Investor, we handicap the 2020 election. There are a lot of things we can watch to determine who might win the election in November. We’ll talk about some statistics about the election, look at the accuracy of polls, and give you what we think will be the best indicator of who will win the election. And no—we don’t recommend trusting the polls. Don’t miss it!Outline of This Episode[0:15] Betting on Madden simulations[1:33] Handicapping the 2020 presidential election[2:43] Statistics on the results of elections[7:18] What is the motivation to get back to work?[8:35] Handicapping the 2020 election: what do the odds tell us?[9:33] Should we factor in the polls?[11:47] What to watch in the stock market[15:33] The potential impact on healthcare[16:07] The performance of companies generating revenue from china[17:54] The best indicator of who will win the electionWhat tracking the S&P 500 tells us about electionsSince 1928, the S&P 500 has predicted the outcome of 87% of the US presidential elections. It has correctly predicted the outcome of every single election since 1984. How do they predict who will win? If the performance of the stock market is positive three months before the election—the incumbent is elected. If the stock market is in negative territory, you’ll likely have a regime change.Not only that, but no president has ever been reelected if there’s been a recession within their last 2 years in office. Trump would make history if he wins. It appears he is going to have a +20% GDP quarter leading into the November election, so we’ll see what happens.Handicapping the 2020 election: what do the odds tell us?What do the Vegas odds tell us about the outcome of the 2020 election? Donald Trump is currently +120. So if you bet $100 on Donald Trump to win, you’d win $120. Joe Biden is -140, so that means that you need to bet $140 on Joe Biden to win $100. Biden is the current favorite. If they were pretty much neck in neck, there’s still one thing about gambling that you have to remember: the house always wins. So, the house would take roughly 10%. So if it was dead money down 50/50, each candidate would be -110. Just in case you wanted to bet on the upcoming elections…Should we factor in the polls?The polls are showing that the betting odds are with Biden right now. But who participates in polls? If we don’t want change, we aren’t going to cast a ballot and let them know who we’re going to vote for. Are the people participating in these polls the people that want change? Is there an adverse selection inherent in these polls? Will they always go against the current regime?Derrick points out that there is some sort of computation involved with using registered voters and there IS a control number. Supposedly the people polled are equally divided between Democrats and Republicans. The bottom line is that polling is a very inexact science. Point-in-case: Trump was polling at 18% at this time in 2016. So what should you trust instead?The stock market will be the best indicator of who will win the electionThere are a few things you can watch with the performance of the stock market that will give you insight into the upcoming election. If there is a democratic sweep where Biden wins and democrats take the senate, that sweep would be bullish for infrastructure plays. So when we look at infrastructure companies, we’re talking Caterpillar, Eaton, Quanta Services, US Concrete, United Rentals, etc.These are companies that are involved in working with infrastructures such as building bridges, roads, and 5G buildouts. So the strategy is this: pick five companies that would benefit if there’s an infrastructure bill. And if they’re outperforming the S&P 500, then it looks like investors are pricing in that it’s more likely that you’ll see a democratic sweep.Conversely, you could look at companies that would be most impacted by a democratic sweep—and a likely 35% corporate tax rate hike. Companies such as ADP, The Payroll Company, CVS, Facebook, Gap, etc. would be what we’d look at. These companies that would be disproportionately impacted negatively if there were a democratic sweep.NOTE: If Biden ends up winning the presidential election, but the Republicans keep the Senate, none of this will happen.Another indicator of who will win the upcoming election? Look at the performance of companies generating revenue from china. We explain this tactic in full detail and also touch on the impact on healthcare, unemployment, and how the Coronavirus plays into everything—make sure you listen!Connect with Derek GabrielsenTwitter: @DerekGabrielsenFollow Derek on LinkedInSend Derek a message hereCheck out Derek’s YouTube channel!Connect With Mark TepperTwitter: @MarkTepperSWPFollow Mark on LinkedInSend Mark a message hereThe SWP Connect YouTube ChannelSend your questions and comments to us at info@SWPConnect.comSubscribe to The Capitalist InvestorShow Notes by PODCAST FAST TRACK https://www.podcastfasttrack.com
