Which Assets to Invest in after the Elections?
One of the Most Awaited Dates of the Political Cycle is Approaching
One of the most anticipated dates of the next four years is around the corner. And no, I’m not talking about the Olympic Games. I’m talking about the U.S. elections, an event that doesn’t just shake up the political landscape, but also stirs up the foundations of global financial markets.
In my opinion, politics and the economy should never be so tightly intertwined. But the reality is that we live in an economic system deeply manipulated by political decisions. Political actors influence monetary policies, interest rates, and fiscal stimuli, steering the economy at will. And, of course, with every election, expectations and market volatility soar.
High-risk assets, like cryptocurrencies and tech stocks, are usually the first to feel the impact. So-called “experts” argue that a Trump victory, as the first openly pro-Bitcoin president, could push this cryptocurrency’s price past the $150,000 barrier. The question hanging in the air is: if Kamala Harris wins, what will happen to Bitcoin and other high-risk assets? While no one can predict with certainty, I’d venture to say that, in the long term, these assets may perform just as well, if not better, than if Trump wins.
Now, don’t get me wrong—I’m not siding with red or blue. My portfolio's performance matters far more to me than who sits in the Oval Office. What I am saying is that regardless of who wins, there are certain facts we simply can’t ignore. And one of the most glaring ones is that interest payments on bonds maturing in the next 1-2 years will need to be made.
Where will this money come from?
The answer is straightforward: more debt. New Treasury bonds will be issued, which will be purchased by both private investors and central banks. And for private investors to buy them, liquidity will need to be injected into the economy. The Fed (and the Chinese Central Bank) are masters at this.
This cycle is extraordinarily repetitive, like clockwork.
The M2 money supply has been growing since early 2023, and here’s a curious fact—so has Bitcoin. Since October 2, the net liquidity from the Federal Reserve has risen by about $117 billion.
This is just the beginning of what I expect will be a robust fourth quarter for Fed liquidity. Much of this rise comes from a reduction in Reverse Repo usage. Meanwhile, the Treasury General Account balance remains high (around $814 billion). However, I anticipate it will decrease significantly through Q4 due to the impending U.S. government debt ceiling deadline.
Money is Worthless
Sometimes, I find myself wasting time, as do many others, trying to pinpoint the “perfect” asset allocation for my portfolio. I ponder over questions like: “Should I put these $100k in this asset or that one?”
If you find yourself in a similar dilemma, my advice is simple: keep buying quality assets. Invest in those that have proven their resilience—Bitcoin, indices, real estate, gold… Stick to these, and you’ll have more than enough coverage against unforeseen events.
If you can borrow money at a low cost, use it to keep buying and growing your financial snowball. Take on long-term debt and let time work its magic.
The markets will take care of the rest, no matter who wins the election. The less you check your portfolio and the more you focus on what truly excites you, the better off you’ll be. If you’re still figuring out what drives you, just enjoy the journey and keep exploring whatever sparks your interest.
Now our portfolio in detail