US Elections and effect on assets in following years !

The United States being a superpower and US Dollar being reserve currency for trade has major implications on trade, financial markets and economies. We will cover major assets/indices in this article:

S&P 500 ( USA top 500 companies index ):

Apart from 2008 t0 2012 period , which was the global recession in financial markets , the index has been in an upwards trajectory gaining 53% o average in every 4 years . The question remains that is the rise because of GDP growth? We would say yes but currencies are in devaluation mode since long time , so a portion of growth is also because of depreciating dollar.

The chart above is M2 money supply which indicates the amount of currency ( here USD) in circulation. This number has gone up from about 9 trillion to 19 trillion dollars. this has been on the back of rising debt on the USA as a country perspective. While GDP has not grown in similar numbers. Below you can see the USA gdp numbers for past 10 years , it is up by 2.5% on aggregate while the money supply has doubled which has caused a more upwards growth in assets.

Now lets have a look at other indices/assets ;

The chart above represents Nifty 50:

Nifty 50 has produced an average return of about 72% in every four years since 2008. The green line that you see is weekly support area which displays buying interest at key levels. Now lets have a look at India’s GDP :

India is in a much better position than other countries , the gdp growth has been up about 67 % in 10 years time . We have a low debt to gdp and strong forex reserves as well as precious metal reserves. The local demand is picking up and also the gdp.

Bitcoin-

Let me explain it in a short and simple manner for everyone. Bitcoin was developed after 2008 financial crisis because of the reason that central banks mismanage the monetary policy in favor of the rich and since than there has been no turning back.

It serves as a long term store of value because it is volatile in short term because of small market capitalization and speculation. But, many level headed companies and investors are heading to invest in it because of the same reason that they buy gold, which is to preserve and grow wealth over long spans of time.

Bitcoin has risen up in value tremendously in past 10 years as you can see in the image above , which is because of adoption and being small in market cap. As the market cap grows for Bitcoin, the gains will become small and volatility will reduce. It definitely is an opportunity but only should be a certain portion of your portfolio .

The chart above is of Gold measured in terms of USD. I repeat myself that a lot of money is coming to gold and silver, the only question when? This is the most beautiful chart we have seen as it represents a Cup and Handle pattern, which means that accumulation phase is gone behind and the new rally will be led by big money and later by retail.

This is how a cup and handle pattern usually plays out *

To sum it up, it is clear that long term has been always up irrespective of recessions, wars and other factors that pull market down. India has a very high amount of savings in household which will be a key factor in driving the economy and markets up in future.

Do we necessarily go up from here? NO , which is why you average down in financial markets by buying in small portions over a long period of time. These are our opinions and not Financial Advice. We will bring more premium content to you like this which only hedge funds or big investors get in markets. That is what we are here for !

Written by

All-Weather-Advisors 😊