Initial thoughts on Trump’s win
Genevieve Signoret
Letter from Queretaro
Feeling sober
We believe that the world has changed. We are watchful and studious, bent on figuring out what exactly is emerging, in particular in Washington DC.
We’re encouraging clients to think and act slowly, execute risk management plans methodically, bear in mind their investment horizons (ward off wasteful anxiety over short-term market fluctuations), and get to work understanding the new world that is emerging.
Admittedly, we’re feeling sober. Back in 2001, we chose the name TransEconomics to evoke our commitment to stretching and reaching across divides: discovering and seizing on cross-border investment opportunities; understanding and decoding for clients the transnational ecosystems we all invest and produce in, love and thrive in; and building a corporate culture that bridges social, gender, racial, linguistic, and gender gaps. Sobering us is a sense that our company’s most deeply held values are under attack.
At the same time, we take some comfort in a job well done. We believe strongly in our multi-scenario approach to portfolio construction. In building our downside risk scenario, called Trigger-Happy, we envisioned a Trump victory. Then, for each client investment horizon, we revamped portfolio strategies to seek wealth protection and growth over that same horizon should global risks materialize. Among other things, this involved taking substantial long positions in U.S. Treasury securities, increasing client exposure to non-USD developed-market currencies and, for clients with short-term investment horizons, bulking up client holdings of U.S. dollar cash.
We hold to our portfolio strategies and in client portfolios are taking no emergency market actions except in accounts with new cash in, where we’re swooping up bargains.
What we know and do not know and our immediate task
We know that the forces of xenophobic nationalism, anti-rationalism, authoritarianism, anti-institutionalism, racism, and misogyny—in short, fascism—are about to enter the White House under the auspices of the Republican Party, and that said party will continue to control the U.S. Congress.
We know that Donald Trump is ruthlessly pragmatic and competitive. That he has never held office before and is deeply ignorant of how government works. That he places no value on anyone or any ideal besides winning, his own wealth, and his own fame. That’s he’s charismatic and is an extraordinarily powerful communicator. And that he speaks to the deepest fears and longings of American whites, especially men, especially those who live outside of cities, are older than 45, earn more than $50,000/year, and are uneducated. He´s beloved by white supremacists.
We perceive Vice President-Elect Mike Pence to be competent and devoted to public service.
We suspect but do not know whether the U.S. constitution will come under attack.
We perceive the U.S. Supreme Court to be non-partisan vigilant upholders of the Constitution.
We do not expect but do not know whether Trump’s self interest will lead Trump to become conciliatory, empower Pence, and generally choose a competent team and delegate the running of government to its members.
We do not know how smooth will be Trump’s relationship with the Republican-dominated Congress. The party is factitious and many in it fear Trump and are ashamed of him.
Our immediate task is to discover the innards of the new U.S. Congress and watch who Trump will put on his team.
On ethics and the management of wealth held in common with others
It should be clear to you all that I believe that to protect and grow our assets is the responsible thing to do. It is our mission at TransEconomics, one I’m proud of.
But of course a vast portion of the wealth we hold we hold not privately but in common with others—people alive today and people not yet born. And thus we’re called to protect and grow these commonly held riches too, assets such as freedom, peace, opportunity, solidarity, fairness, transparency, and of course our natural resources.
This means that we must work for the common good, not only manage global risks but also work to avert them, resisting anti-scientism and dangerous extremism.
And so today I look inward. I question every personal and work habit, ponder all details of my resource allocation.
I’m proud of my devotion to leading this firm in skillful private wealth management, but today I sharply ask myself whether I always show equal fervor in protecting our planet and building a wealth of opportunity, justice, democracy, and inclusion for all in this gorgeously diverse world.
Well said. I very much like your choice of “Trigger-Happy” as a name for your downside risk scenario. And “fascism” is indeed the right word for what you describe as the Republican Party’s “xenophobic nationalism, anti-rationalism, authoritarianism, anti-institutionalism, racism, and misogyny”. To us the US election result has been (a) unbelievable and (b), quite appallingly, happening before our eyes.