All eyes on the US election
Donald Trump taught statisticians and election researchers the meaning of fear in his election of 2016. Despite a considerable lag in the polls, 304 of the 538 electors voted for him. That was a clear victory over Clinton. Four years later, the pollsters tell us that they have learned their lesson. They adapted their methods and forecasting models.
Even if that were true and the predictions are more accurate, one thing is clear: forecasts remain just that, forecasts. There is no such thing as a "100 per cent guarantee". Even if the 86% probability of Biden's election victory seems very high: Trump still has a chance to be reelected*.
As investors, what do we conclude from the current opinion polls? On the one hand, that the chances of the Democratic ticket winning are significantly greater than those of the Republicans running with Trump as incumbent. On the other hand, we note that the probability of a narrow election defeat for Trump has recently fallen noticeably. Thus, the fear scenario for the financial markets of a president who doesn’t accept a narrow defeat has almost completely evaporated.
In our view, this is all good news. Not least against this backdrop, we have decided to increase the equity allocation in the portfolio to neutral. Part of this is taking opportunities offered by sustainable urbanisation as an investment theme.