The change

Change. The most powerful word in public life. And we’ve arrived at the intersection of politics and finances.

The Trump-Biden debate happens Thursday night. Three days later the big legislative election rocks France. Four days after that, it’s voting time in the UK. In just over four months an historic American presidential election happens. In Canada we’re 18 months from the polls, but the campaigning is already hot. Tomorrow there’s a litmus test of Trudeau strength as voters decide who wins in a key Toronto byelection.

Change is the byword for everyone seeking power. And it’s not hard to see that all this is wrapped up in economics, finances plus fiscal and monetary policy.

The comment below about Canadian real estate is so typical of a tsunami of unhappy whining on social media. It helps explain why the T2 gang is being crushed in the polls:

All future generations are affected. No one not born into generational wealth can ever work their way up again. “Working hard” to buy a 1.4 million dollar starter home isn’t f’n possible – the classic “dream” is dead. Our politicians have sold out the future of Canada all so current owners can feel richer and richer.

Our post-pandemic world is an unhappy one for the majority. Global angst, health anxiety and upheaval were followed by boomeranging prices, shortages, then galloping interest rates. An entire generation that had never known inflation over 5% and expected mortgages to be half that has been shocked since 2021. Cheap money and Covid inflated houses, then central banks made home loans swell. The dream died. Governments foolishly promised to fix something they can’t. Now they pay the price.

But it’s not just Canada. Not just real estate.

There is a profound malaise among the masses, based almost wholly on economics. It cannot be hidden, and will likely have consequences for most investors. Look at what a semi-global survey of 34 countries by Pew Research found. The question was simple. The results profound.

What does political change mean?

In France the populists fronted by Marine Le Pen seem set to sweep the coming election. It does not mean the end of President Macron (he has a few years left in his term), but will make his governance more challenging. It’s also consistent with what is happening in much of Europe where anti-immigrant sentiment is a sad, powerful force.

In the UK, Rishi Sunak’s Tories are dismal in the polls – likely headed for an historic drubbing. Labour could form government, but the former Brexit party (now Reform) is gaining fast. Whatever happens, it will be change.

In the States Trump remains competitive with Biden, which is stunning for a guy found guilty of sex abuse, financial fraud and 34 felony charges, while facing sixty more criminal counts. Since his latest court loss he has been showered with campaign funds and cemented his grip on the entire Republican party. People love or hate him for the same reason. He is a disruptor. He is change.

What does all this portend for Mr. Market and your TFSA or retirement savings? The value of your house? Mortgage and GIC rates? The expanding tax burden?

Truth be told, we don’t know. Nor do you. Or anyone. There are too many moving parts, too much voter emotion and too many opportunistic people seeking power. But change is certain and will most likely result in enhanced nationalism, decreased globalism, trade wars and pressures plus happy dictators such as Putin, Xi and the guy with the flattop haircut.

What does history teach us?

That balance and diversification are the safest path. That sudden moves all into cash, or bonds, or gold usually end regretfully. That turning paper losses into real ones is real dumb. So is betting against America. Or becoming a prepper. Stay the course.

Get used to the fact the coming months will deliver volatility as billions of people lurch towards change. Or so they believe.

About the picture: “Thank you for your daily wit,” writes Jodie. “It’s a regular conversation piece in our household. This is Banku. He’s a rescued pup from Ghana sporting the Vets without Borders merch that our daughter volunteered with. He’s quite happy to be a Canadian dog now.”

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