Building Wealth

Expect More Division in Our Country

I usually don't write about politics, but the reality is that the November election is fast approaching...

If you thought our country couldn't get any more divided, just wait until November. Looking at the polls today, it's just too close of a race to favor one candidate over the other.

In a recent CBS News/YouGov poll, Vice President Kamala Harris is leading former President Donald Trump by 3 percentage points nationally, 51% to 48%.

A new ABC News/Washington Post/Ipsos national poll showed similar results, with Harris ahead by 6 percentage points among likely voters.

But according to CNN, another poll showed that Trump leads Harris by a wide margin of 12 points among likely voters in four key states (Arizona, Georgia, Nevada, and North Carolina) when it comes to which candidate folks trust to handle the economy.

With all this conflicting data, it's really a coin flip for who will come out on top. Besides, we can never really count on the accuracy of these early polls. One poll we recently looked at, for example, spoke with only 600 voters in key swing states. And it had a 4-point margin of error, which rendered its results mostly useless.

Another way to try and foresee the election results is to study the prediction markets. These markets allow people to bet on the outcome of the election.

Betting gets an unsavory reputation, but it has a crucial advantage over polling: People are putting real money on the line.

Now, the wisdom of crowds isn't perfect. We see that when financial markets get into a bullish frenzy or bearish panic. But a market can be a great source of information in cases like this.

Plus, the prediction markets are already factoring in the electoral-college complications. If the election comes down to one county in Wisconsin, for instance, prediction markets will be on top of it.

For real-money betting, the world's largest prediction market is Polymarket.

As I write, Polymarket puts the odds of a Harris win at 50% and a Trump victory at 48%. (The numbers don't always add up to 100% because some folks bet on other candidates.)

It's clear a lot of the data out there is pointing to Harris having a slight lead over Trump. But I've been through many closely contested elections in my lifetime. I know that it's just too early to tell.

Also, we haven't seen a debate between Trump and Harris yet. That could certainly swing a lot of voters based on how each candidate does.

Instead of trying to make a call today and position yourself accordingly, I want you to think about the power of investing in what won't change. That kind of certainty lets you make decisions confidently and reap bigger benefits.

Jeff Bezos, the founder and former CEO of Amazon (AMZN), espouses this strategy and provides its most striking example. He says...

I very frequently get the question: "What's going to change in the next 10 years?" And that is a very interesting question; it's a very common one. I almost never get the question: "What's not going to change in the next 10 years?" And I submit to you that that second question is actually the more important of the two – because you can build a business strategy around the things that are stable in time.

With this outlook, Bezos was able to focus his business on the things customers will always want – fast shipping and fair prices. They'll never want slower shipping or exorbitant prices. That insight may sound like common sense, but it allowed Amazon to invest billions of dollars into its two-day and one-day shipping programs and get a bigger edge on the competition.

So, what will do better for your investments? A Trump or Harris trade that may pay off but ultimately head in the wrong direction?

We don't know. That's the whole point.

The only thing we can be sure of is that the markets will get rocky as we get closer to Election Day. We'll see wild swings based on what the betting folks think will happen.

Investing through an election is difficult. But trading through it can be profitable.

All you need is volatility... You can make a lot of money by keeping a level head and taking advantage of it.

My colleague Greg Diamond is ready to trade through the market's impending ups and downs over the next couple of months. I've talked about Greg before, but he has an impressive background as a trader. He has traded for a $3 billion hedge fund and a $35 billion pension fund. He managed multimillion-dollar portfolios across various asset classes. And he also holds Chartered Market Technician designation.

Next Tuesday, August 27, Greg is going on camera to share the details of what could be the year's biggest moneymaking opportunity. You could double your money 10 different times – all without touching a single stock. The event is free to attend, so sign up here.

What We're Reading...

 Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
August 22, 2024