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Rask Roundtable: Will the US Election change your investing? (and stocks you’ve bought)

Recently, I asked the entire Rask Media team to share their thoughts on the US Election and whether or not the Trump-Biden election campaign and outcome has or will change their investing process. I also included my own answers at the bottom.

Naturally, I also asked for the names of any stocks or ETFs they bought recently. You’ll find my two questions, together with their excellent responses, below.

I hope you enjoy the read.

Jaz Harrison

1. Will the US election change your investing process?

It won’t change my investing process at all – every month I’ll still look for the best share to buy. If there is a sizeable drop in the market then I will decide to invest additional money. It’s not often that there’s genuine ‘fear’ in the market to take advantage of.

There are certainly some political and economic ramifications that may happen if either candidate decides to make certain decisions, but I don’t believe it will permanently reduce the long term growth potential of US shares or global shares. The US has gotten through a lot of seismic events before.

Most people reading this are investors in ASX shares. Plenty of ASX shares are focused on the domestic economy anyway, so even if the US election throws up uncertainty, it shouldn’t have that much effect on Australian-focused businesses.

2. What stock or ETF have you bought recently and did you buy it because of the US election?

I haven’t bought any shares in the past couple of weeks, though my last purchase was MFF Capital Investments Ltd (ASX: MFF) and it may be the next one if other ASX shares don’t fall much over the next week/s.
I didn’t buy it because of the US election.

If I was completely scared off by the US then I wouldn’t be buying a LIC that has a majority of its portfolio as US holdings. Most of my portfolio is focused on ASX shares and the Australian economy. So I’m looking to diversify more to the opportunities overseas.

If there’s a US-focused share selloff then I’ll definitely be looking at companies like Altium Limited (ASX: ALU)

At the time of writing Jaz owns shares of Altium and MFF Capital Investments.

Patrick Melville

1. Will the US election change your investing process? (Yes/No and why).

The short answer is yes. I don’t try to time the market, mainly because I don’t use technical analysis and I usually just get it wrong anyway. I think in the case of this election, investors are trying to take advantage of volatility to pick up shares that hopefully dip below what they’re usually worth. So in that regard, I’ll go against my normal process and buy during this election period.

2. What stock or ETF have you bought recently and did you buy it because of the US election?

I’ve been dabbling in some micro-caps that aren’t as correlated with the US markets, but there is definitely still some influence. I picked up some more AVA Risk Group Ltd (ASX: AVA), which I wrote about here, on a recent red day because it pulled back a bit. I would just point however that I like the long-term prospects of this company and plan to hold indefinitely or until the original thesis is busted. So in a couple of years time, a difference of a few cents now isn’t going to make a huge difference on the overall gain of the investment.

At the time of writing Patrick owns shares of AVA Risk Group Ltd.

Ryan Hastie

1. Will the US election change your investing process? (Yes/No and why).

Not really. My investment process is very much centered around thinking about a company over the long-term. The question most on my mind is how a company will be market-beating in say five years time, I don’t believe a change in US President really has a huge impact on this outcome.

If I’m honest though, I can’t help but think about some of the short-term impacts of a change in US President, with US tax reform under a Biden presidency standing out to me. In our own recent election, Bill shorten, (the favourite on the day) came to polls with an aggressive tax agenda around franking credits, capital gains tax & negative gearing. Biden in a similar way if elected plans to “require corporations and the wealthiest Americans to finally pay their fair share (Biden 2020)”.

While I agree this is probably the right thing for the US (with my limited understanding as a foreigner), it may have some short-term implications for stock prices which may see prices drop, providing buying opportunities to great US companies.

2. What stock or ETF have you bought recently and did you buy it because of the US election?

As above, the decision of a potential change in a president is not something that fits as part of my investment process, I will however provide a US-listed company that I am buying due to the US election. If you’re an Aussie, you can be forgiven for not being up to speed with recent US events, we’ve had our own issues to deal with.

Most people will remember the US race riots from a few months ago, but only a few might know that these racial tensions have only intensified in the last few months. On a recent news report, I saw an interview with a gun shop owner from Alabama saying, “Our normal inventory of weapons is around 1000, right now it’s about 200. I’m seeing normal US citizens that have never touched a gun, coming in to buy a weapon and to get training. People are increasingly afraid of civil unrest”.

The US election, no matter the outcome, is likely to see more short-term racial tension due to the growing divide between the red and the blue . Axon International (NASDAQ: AAXN) is a US technology company focused on delivering efficiency and transparency for Police services, security companies & Government departments through the provision of tasers weapons, body cameras, drones & cloud database software. Sadly, I think US Police services will be working overtime in the coming 12 months and upgrades to their systems are highly likely.

At the time of writing Ryan owns shares of Axon International.

William Donnan

1. Will the US election change your investing process? (Yes/No and why).

No, it won’t change the way I invest, particularly because I don’t think anyone, including the pundits, knows who will win.

However, I tend to think a Trump win will be more bullish for markets than a Biden presidency. I try to invest in companies that can grow over time independent of who’s sitting in the Oval Office.

2. What stock or ETF have you bought recently and did you buy it because of the US election?

I recently bought shares in Australia’s largest annuity provider Challenger Ltd (ASX: CGF). My purchase was in no way related to who I think will win the upcoming US election.

I invested in Challenger as I believe annuities will play a larger part in people’s portfolios going forward, and shares look undervalued at current levels. At the time of my writing, Challenger currently trades on a trailing dividend yield of 7%.

At the time of writing Will owns shares of Challenger.

Owen Rask

1. Will the US election change your investing process? (Yes/No and why).

No way, Jose! The Rask investing philosophy and process has and will remain the same. Lately, I have received emails from our podcast listeners, readers and members telling me they have sold or plan to sell.

Investing in shares/businesses is not until the next election.

It’s not until the next market crash.

It’s for life.

Over decades, the stock market has returned 9% or more (per year, on average) despite wars, presidents, prime ministers, election cycles, tax changes and more. Think about that.

2. What stock or ETF have you bought recently and did you buy it because of the US election?

The company I bought most recently is an ASX-listed education provider called Kip McGrath Education Centres Ltd (ASX: KME). It’s been around for 40+ years and provides education directly and via franchise networks, offering math and English tutoring for kids outside of primary school and high school.

The company has an aligned management team, a history of paying dividends, a few growth levers it can pull and probably has enough cash to help it deliver a better online experience for its franchisees and direct students. I also think its shares are undervalued.

Keep in mind, this is a small and riskier business, with a few moving parts. It’s also sometimes illiquid and can be a volatile share to own. It was part of our Rask Rockets 2020 service (which is now closed to non-members).

At the time of writing, Owen owns shares of Kip McGrath Education Centres (and would like to buy more for cheap if people who think the Election matters want to sell them to him).

Here’s to investing better together!

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