The election is tightening.
Betting odds are too.
Honestly though, we’re not paying much attention to it all.
Three reasons why.
One, the thing which will really decide this election is not yet known. That one big, unscripted, unexpected moment which tilts the tables is nothing more than a known unknown at this point.
Two, both candidates are unpopular. Polls show both are disliked more than any modern candidates.
Three, as a result of the above, neither will have a “mandate” to enact sweeping changes upon his or her election.
The last one means there is one major trend that’s likely to continue well into the future.
And The Winner Is...
The most important trend over the last few years is a really simple one.
It encompasses everything.
Increased regulation, zero (and negative) interest rates, tax policy, government spending, and pretty much everything else.
Most importantly, stagnant economic growth.
Some call it the “new normal” and point to any number of factors. They point to aging population, monetary policy, etc.
Sure, they play a part. But there is one much great and more direct factor though.
It’s that businesses don’t invest in what increases wealth and prosperity as much as they used to invest.
Your editor caught this chart over the weekend.
It shows what’s really broken about the economy and why it won’t get fixed after one election.
Here’s the chart:
That pretty much says it all right there.
It shows where largest businesses in the world have been really “investing” over the years and where the real hang-up slowing economic growth can be found.
In economics textbooks, there are three investments to make to grow and improve a business: capital, R&D, and cutting.
Over the last 40 years or so a fourth one has grown increasingly important: regulation and lobbying.
In the old world, if you want more market share, you can build a factory to increase economies of scale, cut prices, develop new products and features, or something else.
In the modern world, getting the government to regulate competition is just as effective.
That’s not all though. There’s also benefitting from the government largesse as well.
Spending on prescription drugs is rising at a double-digit rate.
Not surprisingly, the healthcare and pharmaceuticals industry are the biggest spenders on lobbying and political contributions.
Bigger than the financial industry!
That’s why we see, regardless of who wins, this is one trend that will surely continue to grow.
Investors can capitalize in a number of ways though.
First, the big will get bigger.
From tech to healthcare to telecom, the giants can and will have it all their way.
Second, new tech trends will be adopted faster than they would otherwise.
If you look at history, slow and poor economic growth catalyzes innovation. Often, it’s the only way to survive.
Think of robotic fast food workers. They’re coming anyway. It’s only a matter of time.
If minimum wage is hiked to $15 an hour, it’s just a matter of even less time.
You can vote for Trump or Clinton. But if you want to survive their reigns financially, this is the way you should be investing.