That’s right Blue Lake Invest faithful, welcome to the newest, shiniest and most exciting ongoing series to ever hit the website. ASX:TRUMP will be a series of articles that take a light-hearted look at assets that stand to benefit from a Trump presidency. We all know that the US markets tend to dominate global financial affairs so there’s no point hiding from the fact that Donald J Trump could seriously affect ASX outcomes if he makes it to the White House. Should we all be scared? Well, maybe just a little. Or, perhaps we Australians should be thrilled at the prospect of a US president who “builds walls better than [anyone else]” as well as promises to “take the jobs back from China [and] Mexico”.
Before we kick off the ASX:TRUMP festivities we should probably recognise that today is very important to the presidential aspirations of Donald J Trump. Why? It’s Super Tuesday! Or at least it will be in a few hours, depending on the time zone from where you read this post.
What’s Super Tuesday?
In the American electoral system Super Tuesday refers to the day where Republican and Democrat candidates compete for the largest amount of primary election “delegates” in the primary election race. Once a candidate reaches a certain number of delegates they become the party’s presidential election nominee. Trump has already been dominating earlier primary elections and Super Tuesday could very well be the day he achieves an insurmountable lead in his bid to be the republican candidate. If Trump secures a Super Tuesday whitewash it’s very likely he’ll end up president, with US politics professor Helmut “World’s Weirdest Name” Norpoth backing him in at 97% likelihood to beat Hillary Clinton, or 99% to overcome Bernie Sanders (the last standing Democrats contenders).
So here we are, facing the very real possibility of a Trump presidency. There are few jokes to be made now that the worlds largest economic and military power could potentially fall under the control of a man who believes global warming was created by the Chinese to make US manufacturing uncompetitive. Accordingly, concerns are being raised in the US and around the world that a Trump presidency could initiate an unprecedented period of global social and economic volatility. What do people do in times of chaos and uncertainty? The answer is, sadly, buy powerful automatic assault weapons.
NASDAQ:SWHC can attest to that fact. The NASDAQ listed Smith & Wesson Holding Company has gained 83% between February 2015 and February 2016 dealing in 2 time-proven American consumer favourites: firearms and firearm accessories. SWHC also produces handcuffs, personal armour and riot weapons. Should generalised civil unrest ensue if Trump takes the White House SWHC stands to benefit from its trusted household brand-name and extensive US dealership network.
You might have noticed that this is the first time we’ve ever talked about a US listed stock, but fear not: most Australian brokerage platforms (including my own ANZ e-trade) allow you to trade US listed stocks pending a simple tax form filled out for the benefit of the Securities & Exchange Commission. SWHC also boasts the added benefit of exposing you to moderate price gains every time gun reform is discussed by Congress. Given the current state of American (and global) politics SWHC could be a very effective hedge against a variety of adverse events. This stock also has the benefit of protecting you should the AUD/USD exchange rate tip in favour of the greenback, as these shares are denominated in US dollars. However, if the USD falls against the AUD while you hold these shares any gains will be eroded in the same way. Life’s tough like that.
As the Trump Train rolls towards the White House myself and Mick will keep you up to date with all you need to know, and continue to suggest attractive assets along the way. Join our Blue Lake Invest subscriber community below, and get your hands on the best new articles before everyone else.