Was There a Red Wave? (2022 Election)

Last week were the mid-term elections in the US. This video is going to look at whether there was a “Red Wave” and what that means for your money.

SOURCES:

President Biden comments: https://www.youtube.com/watch?v=KbpR9EHgS9Q

VIDEO SUMMARY:

Elections are important. Whether you are Republican or Democrat, as a business person, I think it is important to look at election results, and try to understand what people are thinking so that you can determine how that will impact financial markets over the next 1-2 years.

Let’s look at where we currently stand with election results. Before the election we had a Democrat President, House, and Senate. The election results are not going to be finalized for a while, but it is likely that the House switches to Republican control. This means that for the last two years, the Democrat party could pass any new laws they wanted, and now it is going to be more difficult.

The Democrats have been celebrating these election results. And you might think that is strange. How can you lose and count that as a victory? Democrats are celebrating because many of the experts were predicting what they called the “Red Wave.” People expected a massive wave of Republican wins.

The reason is because things are not good in America right now. There is record gas prices, inflation, crime, and homelessness. A lot of different polls say that a majority of Americans think the country is on the wrong track and President Biden’s approval ratings are at an all-time low and getting worse. It is so bad, that people expected voters to vote out the party in power. That’s what happened, but not as much as people expected. The Democrats lost the house but they still won a lot of their elections.

So, the Democrats have claimed this as a victory. To use an analogy, it is like we are all sitting together in a car, and we are driving towards an economic cliff. And we all know we are heading towards that cliff, and we decide to stay in the car anyway.

The big takeaway for me in all the election coverage was when President Biden gave a press conference about the midterm results. Take a listen:

Biden says he is not going to change anything. He thinks this election has given him a mandate to keep things going in the same direction.

So, as I continue to explain on this channel, the economy is bad and it is going to get worse. How much worse? Take a look at the Fed Funds Rate. We are currently sitting at 3.08%. The Federal Reserve has said they expect the rate will continue to rise as they attempt to battle inflation. As this rate rises, the economy is likely to get worse. But keep in mind that historically, we are still at a very low rate. Things can get a lot worse. If we look at the 70s and 80s when we were faced with similar inflation, the Fed Funds Rate got to 19%. So, if we assume today that the Fed Funds Rate gets up to 15%, that means that your life will be five times as worse.

That is your takeaway as a business person. The President is not going to change anything, and things are going to get worse. The government spending is going to continue. The inflation is going to continue. Businesses and financial markets are going to suffer. The housing market is going to suffer. The stock market is going to suffer.

My recommendation in this type of environment is to focus on becoming adaptable. Many people will tell you to make conservative financial decisions. That is a good recommendation most of the time, but it is not going to be enough. You need to make conservative financial decisions AND be adaptable. You need to be able to react quickly to take advantage of opportunities.

One example is that recessions are usually focused in different geographic areas. For instance, California and New York are really suffering right now. You might need to be prepared to pack up your family and move to where the jobs are. If you try to stay where you are at, you are going to continue to suffer.

Those are my takeaways from the election. The country is going to continue in the same direction, and the economy is going to get worse. The people who are the most flexible and adaptable are going to have the best results.

Leave a comment down below letting me know what you think!

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Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.

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