Disrupter in Chief: Investing During the Trump Presidency

What happens when the CEO and principal stockholder of a private corporation becomes president of the wealthiest, most powerful nation in human history?

That is a question we the people are now in the process of answering.

I have spent most of my professional career as a business owner. That background—and a little knowledge of history—gives me insight into what we might expect.

Businesses are not democracies. When a CEO decides to take a company in a certain direction, he or she can legally demand that it be “my way or the highway.”

That’s the world our president comes from. For his entire professional career, he has been in complete charge of his ever-growing operations around the world.

He does not have a history of asking for approval before forging ahead.

The first thing our new president did after his inauguration was issue a series of presidential decrees. Ruling by decree is how he has lived his professional life, so no one should have been surprised that he started his political life this way.

As a citizen of the world’s leading democracy, I have deep concerns about our freedoms and the survival of our political institutions.

But as a financial advisor, my job is to figure out what the positive and negative impacts of this administration might be for investors.

As a lifelong businessman, I have often found government to be frustrating.  Things that businesses are capable of doing quickly, government agencies often do slowly, or not at all.

In my 30s I was a real estate entrepreneur, like our president. I avoided doing business with government agencies as much as I could. Different levels of government tax us, regulate our properties, issue permits, lease properties from us, issue work regulations, regulate zoning, issue fire and safety regulations, grant special tax breaks, issue loan guarantees, and pay the rent for certain tenants. And I am certain that I have left some items out.

Working with government agencies can be a time-consuming and frustrating experience. An application can take months just to come up for consideration, and decisions are often made by committees.

As I remember these experiences in my own life, it is not hard to understand many of this president’s cabinet picks. Regulations are a constant frustration to real estate entrepreneurs, so now that we have one in charge of the government, it should not be a surprise that he is using his power to destroy as much regulation as possible.

This explains cabinet picks such as Scott Pruitt to run the EPA. Scott Pruitt has sued the EPA perhaps more than anyone else. From a businessman’s perspective, who better to reduce environmental regulations than the EPA’s number-one enemy?

And here we come to a glimmer of understanding of the odd combination of a disruptive president with a roaring stock market.

Regulations are costly to businesses.  We pay employees to make sure we are compliant with regulations, to file regulatory reports, and to answer regulatory inquiries. Not only is this an out-of-pocket expense, but those employees could be better employed working on producing goods and services.

So if regulations are reduced, it follows that corporations will be saving money, and that means earnings may go up. To be sure, it’s still early in the administration. Investors are showing their enthusiasm for less regulation, which has a positive effect. But the negative effect of a disruptive administration has yet to fully manifest.

Our disrupter in chief, in attempting to rule by decree as he did in the business world, took actions in his first days in office that could have a big impact in the months ahead.

His executive order to ban immigrants from seven Middle Eastern countries may have been blocked by the courts, but it has had the collateral effect of frightening away immigrants from many other countries, too. Farms from Georgia to California are worried that the Mexican migrant workers they depend on each year may be in short supply if they are afraid to cross the border. Without migrant workers to help with the harvests, the price of produce could rise sharply.

It is too soon to know if the immigration situation will actually lead to higher prices, but it seems probable. More importantly, this is not likely to be the only disruptive action taken by this president. I expect the next four years to be a roller coaster ride for investors.

Hal Masover is a Chartered Retirement Planning Counselor and a registered representative. His firm, Investment Insights, Inc is at 508 N 2nd Street, Suite 203, Fairfield, IA 52556. Securities offered through, Cambridge Investment Research, Inc, a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Investment Insights, Inc & Cambrige are not affiliated.  These are the opinions of Hal Masover and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Comments and questions can be sent to hal.masover@emailsri.com.