Monthly Review - July 2024
“IF YOU MIX YOUR POLITICS WITH YOUR INVESTMENT DECISIONS, YOU’RE MAKING A BIG MISTAKE.” ~ Warren Buffett
Nothing stirs emotion and divide opinion quite like an election, especially in the era of social media and AI. From headlines accusing a woke bias to the outright dismissal of fake news, politicians divide opinion, often with limited evidence. The year 2024 is shaping up to be a political whirlwind, with over 2 billion people expected to cast their votes. And U.S. politics in particular hit fever pitch in July…and opinions are running wild!
This month we ask, how much Alpha can one squeeze out of Politics?
Like so many things in life, the answer is nuanced. However, political events generally influence market sentiment rather than intrinsic value. And whilst sentiment can significantly impact prices, it is worth reminding that price is what you pay, while value is what you get.
That said, politicians wield considerable power, and their policies can have material impacts on various sectors and industries. For instance, tariffs, price controls, and inflation are direct consequences of political decisions that can affect market prices. Policies might also influence competition, either stifling or promoting it.
Although the results remain very much uncertain, initiatives on Donald Trump's agenda will likely prove to be inflationary. While there may be benefits such as increased capex and investment into local economies, and job creation, the overall impact would likely be detrimental to the American economy. These policies are expected to be financed through debt, leading to higher deficits and exacerbating wealth inequality, as the gains from increased profits accrue to the owners of capital while higher costs disproportionately impact the income-dependant.
From an investment perspective, we expect greater uncertainty in the cost of capital and higher capital market volatility. The best approach: do your own research, understand the value of your asset, and be patient.
Diversification is also becoming more valuable. Gold looks very attractive technically, especially in the face of rising uncertainty and increased polarisation. As does Treasury Inflation Protected Securities (TIPS) and managed futures. These are all key allocations in our Permanent Portfolio, which we remain very confident will outperform inflation and protect client capital against severe drawdowns.
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CONTACT US
For further information on any of our services, or if you would like to arrange a meeting with an investment manager to see how we can work with you, please get in touch.
LeifBridge Investment Services
Shard Capital Partners
Floor 2, 70 Mark Lane
London, EC3R 7NQ
United Kingdom
Telephone: +44(0)20 7186 9900
Email: Info@Leifbridge.com
www.leifbridge.com
Disclaimer:
We try to ensure that the information provided is correct, but we do not give any express or implied warranty as to its accuracy. We do not accept any liability for errors or omissions. The content of this brochure is for guidance purposes only and does not constitute financial or professional advice.
IMPORTANT INFORMATION
LeifBridge is a trading name of Shard Capital Partners LLP. Shard Capital Partners LLP is a limited liability partnership, registered in England with registration number OC360394. Shard Capital Partners LLP Registered office:36-38 Cornhill, London, EC3V 3NG.. Shard Capital Partners LLP is authorised and regulated by the Financial Conduct Authority in the United Kingdom, reference number 538762.
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