This article challenges the assumption that Donald Trump's return to the political scene will dictate global economic and market trends. It argues that history shows the impact of US presidents on markets is often unpredictable and that relying on a single factor for forecasting is risky. The author suggests that contrary to expectations, Trump 2.0 may not play out as anticipated and highlights the cyclical nature of global markets, urging a contrarian approach to investing.
The world is an increasingly fragmented and complex place, but everyone I meet appears to be obsessed with just one person: Donald Trump . All projections about the coming year assume Trump will dictate global economic and market trends. A single factor is never a solid foundation for forecasting. The world is not unipolar and does not revolve around one personality, not even one as big as Trump’s.
Historically, the impact of US presidents on markets has often been surprising, and at times minimal. Investors were braced for a negative shock when Trump came to power in 2017, but that year turned out to be one of the least volatile for US stocks ever. Trump constantly threatened to undermine China with tariffs and yet, during his first term, the best-performing major market in the world was China, outpacing even the US. If past is prelude, Trump 2.0 will not play out as most investors expect. Ironically, continuing faith in “American exceptionalism” assumes that under Trump the world will see more of the same trends it saw under Joe Biden: US dominance of the global economy and markets, led by its big-cap tech businesses. But those trends are already very extended and vulnerable to forces larger than the US president-elect. For a variety of reasons, competitive churn could return to global markets in 2025 and lead to seismic shifts. History shows that the global economy and markets move in cycles, not straight trend lines. Contrarian investing is rooted in these patterns. The hot investment theme of one decade typically gets overcrowded, sowing the seeds of its own demise, and does not stay hot the next. But here we are halfway through the 2020s, and the hot bet of the 2010s — big US tech — is still paying off. In the past, the list of global top 10 companies by market cap has changed dramatically with each new decade. Now seven of the 10 are holdovers from the 2010s, including Apple, Microsoft and Amazo
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