by: Mark Skousen
In the weeks and days preceding November 9, 2016, the day the next president of the United States was elected, markets had been trading in a very cautious pattern.
A close election race combined with a turbulent year for both domestic and foreign stock markets made the election a pivotal time for several major investors who sought to profit handsomely if the election broke a certain way. Many financial gurus and political pundits believed the markets would rise if Hillary Clinton, the candidate representing “more of the same” and a “continuation” of Obama’s policies, won.
Conversely, if the “wild card” candidate, Donald Trump, won, it was widely predicted that stock markets would fall. Some pundits predicted a Trump win might send the markets down sharply.
As we now know, Donald Trump pulled off one of the largest upset victories in recent presidential history. The markets responded by rocketing upwards within hours of his victory of becoming official. As a result, financial gurus and political pundits who had bet against Trump had egg all over their faces that morning, and for some time to come
For instance, Nobel prize-winning economist Paul Krugman was certainly not happy – he had predicted that the stock market would collapse after Trump won. But perhaps the worst decision in this case was made by George Soros, the billionaire investor who was known for his support of Hillary Clinton.
Soros’ biggest claim to fame may be as the clever investor who “broke the bank of England” and made a billion dollars by shorting the British pound in 1992.
But what the gods give, they can also take away.
According to the Wall Street Journal, George Soros lost close to a billion dollars by betting against Trump. Soros is a defender of the “open society” (the name of his foundation). Many of Trump’s views run counter to the idea of an open society.
By contrast, billionaire Carl Icahn made upwards of $700 million on Nov. 9, and John Paulson reaped over $463 million on the same day. No doubt they have made even more since then.
The lesson is clear: Never let politics interfere with your investment decisions. You must always keep your emotions separate from your money.