The last few days have been interesting, to say the least. As I mentioned in the tailwinds post, I could sense the anxiety of people involved in the election on social media. I couldn’t escape it, whether I was an American or not. Election content was plastered everywhere online, and I couldn’t help but be curious, lol. Once again, polls and so-called experts were wrong in predicting the outcome Thomas J. Wood on X of the American Presidential Election, and many people are analyzing why they could have been wrong. As an outsider just observing, I find it quite interesting. Are there any lessons that could be drawn from this event, from the participants that had skin in the game and won, and those that lost? Yeah, I guess, but the outcomes of such an event could be overdetermined, and I could draw the wrong conclusions based on a bevy of reasons, especially confirmation bias. However, I am going to do it anyway, because I find it interesting.

One of the main talking points going into the elections was prediction markets. A week or two weeks before the election, they had constantly shown Trump leading, and many people suspected they were being manipulated Newsweek article. I don’t know, maybe they were, but the best counterargument I have heard is that there are many intelligent participants in a market, and if they see a mispricing due to manipulation, it’s in their financial self-interest to take the opposite side and benefit.

One of the participants that had taken a big bet on Trump winning was a French trader Reuters article, and he turned out correct. He conducted some interesting social science analysis before making his bet—the neighbor poll survey Financial Times article. This is when you ask participants who they think their neighbors will support. The neighbor polling method argues that you get a more accurate sense of people’s biases, especially if they want to hide it for some reason, and you can use this information to make better predictions. Interesting.

On the other hand, people who got their predictions wrong were very surprised. They were aware of the same error that happened in 2016 and had attempted to avoid repeating it Newsweek article. The error was underestimating Trump’s support or overestimating his opponent’s support—Clinton and Harris. A very basic observation is that they are both women. I don’t know if there is much to it, but it is what it is, and the memes keep coming HikikomoriBleeh on X, lol. I am sure there are more reasons the expert polls were incorrect and Trump’s opponents failed, and it will be investigated for the foreseeable future.

So, what can I do with this new information of a new USA president? Does it affect me in any way, and will anything change? I think, yeah. Firstly, it affects me because I own a small bag of American public company shares, so I have skin in the game. The question I am wondering now is what firms will do well under his presidency. I think it’s a wise decision to consider his major donors and whether they own publicly traded companies Washington Post article Business Insider article. Out of his donors, Elon Musk and crypto users stick out to me. Elon is a major shareholder in Tesla, and I expect it will do well as it consolidates its position as the No. 1 EV/Robotics/AI company.

The incoming administration is expected to decrease taxes, decrease regulation, and increase tariffs Wall Street Journal article. So it’s conceivable that Tesla will record higher margins from lower taxes and higher sales volume after tariffs have been implemented because consumers will have an incentive to buy goods and services made in America. Additionally, they will increase their dominance in building the EV charging network infrastructure that other EV companies can use, which could possibly be another revenue stream for Tesla. I am reminded of the biblical scripture, “For to every one who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away.” - Matthew 25:29. Tesla and Elon will keep winning.

Crypto has had a challenging time under the previous administration, with regulatory uncertainty and attacks from the SEC. I expect this will change since Trump has positioned himself as a pro-crypto incoming President. He has a crypto project, World Liberty Financial, and an NFT collection. I think crypto projects that have shown product-market fit will do well under the new administration—Bitcoin, stablecoin products and services, and prediction markets (Polymarket). Regulatory clarity for crypto will attract talent and capital, and I hope and expect to see more useful and innovative decentralized applications built on public blockchains.

After all the benefits I have mentioned from the incoming administration, I am still cautiously optimistic. A big factor that could stop the companies and projects I mentioned in this essay and this one Tailwind Success from doing well price-wise is INFLATION, as central bankers will be forced to stop decreasing interest rates and maybe even start increasing them again. Max pain. So far, inflation has come down from monthly record highs of 9.1% in June 2022 to 2.4% in September 2024, and Trump’s stance on tariffs and immigration could be inflationary.

Higher tariffs will probably increase the prices of goods and services because international manufacturers will pass on the tariff costs as they try to maintain their margins. High immigration decreases labor costs, and immigration will most likely be reduced under Trump. Therefore, this will increase labor costs for businesses, which will be passed on to consumers, and inflation will turn up again. I am not predicting this will happen, but I am aware it could happen, which is why I am cautiously optimistic. Some people are very pessimistic about the incoming administration. I think they should give them a chance and judge them based on their results after four years.