Politics Made the Long Bull Market. Could It Unmake it?
The U.S. jobs report released today proves the economic recovery’s momentum has slowed. Meanwhile, our bitterly divided Congress can’t agree on a fiscal rescue deal to help working Americans and small businesses.
It’s a perfect illustration of how political decisions shape the economy — and your portfolio’s performance.
This isn’t a new phenomenon. In fact, decisions made decades ago have had a profound impact on the structure of the U.S. economy, and on which stocks have done well over the years.
Tax policy has punished companies in labor-intensive industries for over a generation. Add to that the rising cost of employer-paid health coverage and an overvalued dollar, and you get a toxic combination.
Jobs and investment head overseas … wealth inequality shoots up … and stock market investment concentrates in a small group of massive companies that reward their owners with huge wealth but employ few Americans.
In this week’s video, I’ll show you the evidence that this system is not sustainable … and explain what that means for your stock portfolio.
The Writing Is on the Wall
The historic bull market is not just about technological change. Other structural factors that favor many of the stock market’s leaders will eventually run out of steam.
As politicians recognize the danger, they may take steps to change the rules. That could lead to a rapid shift in investor sentiment towards certain sectors.
The implications may be hard to imagine today … but to be a smart investor, you have to prepare for the future.
Today you’ll find out:
- Forget about corporate taxes, these other burdens on U.S. companies are what have pushed jobs and investment overseas. (2:01-6:03)
- The U.S. dollar’s role as a reserve currency is under threat, precisely because of the system it helped create. (6:03-10:12)
- Growing political pressure is just one reason this system is unsustainable … here’s what it could mean for the stock market in the U.S., and around the globe. (16:05-18:41)
As a side note: We don’t provide transcripts for our YouTube videos. Many of you have asked. However, if you would like to see subtitles, you do have that option. Click the “cc” button in the bottom-right corner of the video. The transcription won’t be perfect, but it should help.
Editor, The Bauman Letter