So, about Tuesday night …
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Was the first presidential debate “must see” TV?
Or was it “must NOT see” TV?
I’m sure it was entertaining to some … and extremely frustrating to others. Or, it might have been a mixed bag to everyone. It’s difficult — if not impossible — to even name a winner.
Fortunately, as investors we don’t need to know who won. We don’t even need to know who will win in November to start identifying opportunities.
There is one thing we can be sure our next president will do, no matter if it’s Donald Trump or Joe Biden. This is not about my political views or taking sides. It’s about making money …
The thing that stood out to me from the debate was that neither candidate provided specific details about his plan for the economy.
That’s fine. If there’s one thing I do know it’s that both would spend … spend … and spend even more while in office.
Trump will continue to allocate trillions of dollars to infrastructure. And if Biden takes over, his grand plan for clean energy will also lead to trillions in spending.
Ultimately, both are positives for the economy over the long term.
However, it could be a bit of a winding road to get there. That inevitable spending increase would lead to more printing of money. And as more dollars make their way into circulation, the value of the greenback drops.
All of that spending in the next administration will come on top of everything done since COVID-19 reared its ugly head earlier this year. Once the economy was shut down, the government stepped in with record financial stimulus — and that’s likely to continue for the foreseeable future both in the U.S. and abroad. House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin are right now talking about another $2.2 trillion stimulus package.
Plus, the Federal Reserve now says it will keep interest rates near zero through 2023, a whole year longer than initially expected.
All of this combined will lead to several things …
- A Lower Dollar: This is good for U.S. exporters and will help boost the economy, specifically manufacturing.
- Low Interest Rates: Low rates mean cheap money for companies and individuals. It also leads to low mortgage rates, which will help keep the housing boom going.
- Stronger Stocks: Everything I just mentioned is good for stocks. And when combined with the highest level of checkable deposits, savings accounts, and net worth ever — yes, it’s true — it will ultimately lead to a strong rebound for the economy and stocks.
A strong economy and stock market are exactly what we want to see as long-term investors. So, while I said I wouldn’t share my political opinion with you, I can say this …
There will be opportunities with either a Trump win OR a Biden win.
I’m pulling together my complete election playbook for investors now and will be sharing it with my subscribers in the next few weeks, but I like what I see.
Another Catalyst Most Are Missing
All that massive spending will help the economy and stocks, but as with most things, it’s also a double-edged sword. There’s one other thing that will come from more spending.
Inflation.
More dollars in the money supply leads to inflation, so smart investors will look for ways to hedge its impact. Cash won’t work because returns are pathetic with rates so low. Gold is a popular inflation hedge, and it’s done okay this year, up 25%.
But cryptocurrencies like bitcoin and altcoins are better hedges with significantly higher upside potential.
Cryptocurrencies are increasingly popular as a hedge because they cannot be manipulated by governments or anyone else. Many — like bitcoin — even have a fixed supply written into their software code. That makes them a great “store of value” holding.
Software company MicroStrategy (NASDAQ:MSTR), valued at $1.5 billion, recently became the first publicly traded company to move almost all the cash on its balance sheet into bitcoin instead of U.S. dollars. CEO Michael Saylor said the company sees bitcoin as “less risky” than cash or gold, which says a lot.
Now, take a look at the chart below, which shows bitcoin’s price appreciation versus the U.S. Dollar Index over the last five years. Bitcoin is up an amazing 4,500% while the dollar has gained less than 2%!
The greenback is not even keeping up with inflation over the last five years, whereas bitcoin has surged.
All of this makes bitcoin and especially altcoins — alternatives to bitcoin — hot commodities right now.
But the story is so much bigger than that. When people wake up to the fact that altcoins aren’t fantasy internet money or a wannabe version of bitcoin, there will be an enormous rush into this asset class.
Bitcoin pioneer Charlie Shrem and I call it the “The Awakening,” and it will lead to mainstream acceptance of altcoins as a serious investment vehicle.
This awakening is lighting a fuse under the altcoin market — one that I expect will set off a huge explosion of wealth.
On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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