President Joe Biden is now in office, and it’s time to start thinking honestly about how his policies will affect the market.
There are lots of people talking about the energy sector:
Oil will be down.
Green energy will be up.
So the so-called “experts” say.
And they are probably right, because, remember: the policy doesn’t set the market, nor does the result of the policy. It’s human sentiment at the wheel.
So if the vast majority of investors believe green energy will benefit from Biden’s presidency, then green energy is probably going to rise whether or not it has much to do with the new administration.
But there’s another sector that might be exposed to the Biden White House that fewer people are talking about.
It’s the gig economy: companies like Uber, Lyft, and DoorDash that rely on classifying their workers as independent contractors rather than employees.
Those companies need that classification because they rely on a vast workforce paid by the “gig” rather than paying them by the hour or giving them a salary.
But that structure is unpopular with the Democratic Party. Their strong relationship with labor unions and their fight for workers’ rights makes them view these companies as exploitative.
Biden campaigned on helping gig workers become classified as employees, which could be bad news for the Rideshare services of the world.
We’ve already seen this battle in miniature in California.
In November, California voters shocked pundits as they overwhelmingly passed an amendment to qualify these workers as contractors. But companies like Uber and Lyft spent $200 million fighting that measure. It won’t be as easy for them if it’s being pushed from the Bully Pulpit in Washington, D.C.
The Bottom Line for You
So what does this mean for you as investors and traders?
It depends on your current position.
If you’re not currently invested in any companies within the gig economy, then you don’t have any major concerns.
Even if these companies totally collapse, it’s no concern to you. You can sit on the sidelines and even look for bearish plays betting against the gig economy.
On the other hand, if you’re currently a long-term investor in a company like DoorDash or Lyft or Uber, you might want to reconsider that position.
We’re not telling you these companies will definitely fail. We can’t see the future.
What we are telling you is that if the Biden Administration wants to crack down on the gig economy, they’re not gonna care a whit about what it does to their shareholders.
These companies have some shoddy fundamentals to begin with and most of them aren’t profitable. Some of them won’t survive a huge move against them by the federal government, and the ones that do will really struggle for the time being.
So just be aware. There’s no need to panic sell all your shares right now, but this is a story you’ll want to continue to monitor.
We’ll be right here monitoring it with you. Keep on fighting!