What exactly is the ‘Trump Bump’?
The idea behind a “Trump Bump” for art is that the president-elect will decrease taxes in an effort to increase investment and improve the economy.
For those who can afford luxury art, this might give them more confidence that they will have more discretionary income for high-cost purchases like art.
Critics say this could make the art market increasingly out of reach for most Americans.
One of the firms looking to increase access to art is Masterworks. Instead of spending millions on a single painting (or piece of fruit) at auction, investors can now purchase fractional shares of blue-chip paintings by renowned artists including Pablo Picasso, Jean-Michel Basquiat, and Banksy.
You can browse Masterworks’ impressive portfolio, choose how many shares you’d like to buy, and once the firm sells the piece you’re invested in, you’ll get a return from the net proceeds — and Masterworks has already sold roughly $45 million worth of art to date.
What does an art market boost mean for me?
While the Trump Bump may spark an initial spurt of market confidence, successful investing requires careful planning and a long-term horizon. The key to that is diversification, cushioning your investment portfolio from inevitable market fluctuations.
According to Deloitte, art has a low correlation with stocks. Meaning, when the stock market is down, art may be performing relatively better, and when stocks are up, art may be comparatively weaker. In that way, it can be helpful for diversification.
If you’re looking to diversify your portfolio as a hedge against stock market fluctuations, Masterworks can help with this sort of portfolio diversification, too. Since launching in 2019, they have exited 23 of their paintings, all at a profit. Just like any investment, art takes patience, and you need a relatively long-term horizon to see meaningful returns.
Masterworks investors have realized representative annualized net returns like +17.6%, +17.8%, and +21.5%* (among assets held for longer than one year).
New offerings often sell out quickly but you can skip the waitlist here.
- See important Regulation A disclosures at Masterworks.com/cd
What about crypto?
News of Trump’s electoral win has also given the crypto market a boost. Bitcoin has reached unprecedented highs, rising above $90,000 last week. Interestingly, the duct-taped banana was even purchased with cryptocurrency, showing how digital assets are also fueling the art market's surge.
In an address at Nashville’s Bitcoin2024 conference, Trump said “the United States will be the crypto capital of the planet, and the bitcoin superpower of the world.”
Unlike art, optimism for the crypto market has less to do with tax cuts, and more with expectations Trump could deregulate the industry. He also wants the US government to hold more Bitcoin. In doing so, he could increase the digital currency’s legitimacy and lead to an increase of its price, too.
For those interested in investing in digital currencies, Robinhood Crypto is a platform where you can buy, sell, and store digital currencies including Bitcoin.
On average, it also offers the lowest cost to trade crypto – meaning, you could get up to 3.6% more crypto on a Robinhood transaction. You can also set up recurring buys to turn crypto investing into a routine by creating an automated investing schedule.
What about the stock market
While art and stock performance haven’t been too closely correlated, crypto and stocks share much more overlap in terms of their driving forces.
For instance, rising interest rates tend to decrease prices and demand for crypto and stocks, while falling rates tend to have the opposite effect.
While Trump’s presidency may have given these markets a leg up, they have also benefited from a recent rate cut. The U.S. Fed’s decision to cut rates by 0.25% at the start of November has ushered in some stock market confidence.
Understanding market behaviour is key to making strong, long-term investing decisions.
Moby gives you access to the best investing research, broken down into simple, easy to understand formats. The platform was launched by a team of former hedge fund analysts, and it provides individual stock picks.
The platform has already helped over five million users, and Moby’s success speaks for itself. The platform’s stock picks have outperformed the S&P 500 index by an average of 11.95% over the past four years.
The bottom line: Invest for the long run
Across art, crypto, and stocks, the Trump Bump has conjured up optimism and short-term gains. But keep in mind that in the last 75 years, American elections have not impacted the medium to long term for the US stock market. That’s why it’s so important to invest in what you want to hold, regardless of who’s in power. A good example of that is gold, which has proven a resilient investment for the long run to stabilize your finances.
This year, the price of gold continually hit unprecedented highs, and Goldman Sachs suggests the precious metal will rise another 11% by the end of 2025, according to a report from Business Insider.
You can invest directly in gold by opening a gold IRA account with the help of Preserve Gold. It’s designed to provide a secure and stable investment option for the long run, enhancing your portfolio’s diversification and safeguarding against economic uncertainties, too.
You don’t have to pay any fees on your gold IRA for up to 5 years, and can rollover your existing 401(k) or IRA accounts without incurring any penalties. They also offer transparent pricing with no hidden fees, which means you get competitive rates to purchase and store your precious metals.
Sign up today to get a free investor guide.You can also book a free consultation with Preserve Gold’s specialists to discuss if a gold IRA is right for you.
