What Does a Trump Victory Mean to You?
So now we know. After a seemingly unending election cycle, we have a new president and some new faces in Congress.
An election of this magnitude certainly warranted everyone’s attention. It was probably hard to ignore. But, it’s important to remember that even major elections don’t often influence the markets – one way or the other – over the long term. Time should prove that disciplined investors who stay the course are likely to be the real winners.
Here’s where we stand now that the election is over:
- The U.S. economy appears poised for continued moderate growth.
- Consumer balance sheets are strong. Inflation and interest rates are on a gradual upward path.
- Although global growth has slowed somewhat, the U.S. and the worlds’ economies are still growing.
- We expect financial markets to show heightened volatility for 2 weeks to 3 months until the markets have a better idea what a Trump presidency looks like.
- Potentially similar to the U.K.’s ‘Brexit’ vote, after the surprise ‘Exit’ vote, the financial markets were down. As more details of Brexit emerged and as the initial shock passed, the stock markets stabilized. We think this could have a similar outcome as the markets become more comfortable with a Trump presidency.
- As always, we caution investors to separate emotion from their financial decisions.
- The election results do not justify drastic action for long-term investors. Our economy is on a steady path to growth and remains one of the most dynamic in the world.
- As a reminder, in the U.S. we have 3 branches of government. Even though the Executive branch has a fair amount of power, Congress and the judiciary may not see eye to eye on all of Trump’s positions and will serve as a tempering mechanism.
- Short-term volatility could be a buying opportunity for investors poised to buy fundamentally sound companies at a potential discount.
- While we don’t expect the election results to change our long-term plans, we will continue to monitor the markets and are always ready to discuss any concerns or questions you may have. At this time, we don’t favor trying to time the market by getting out of the stock market. One of the reasons we recommend a well-diversified portfolio of stocks and bonds is so we can weather any headline surprises that arise.
If you would like to discuss this further, please give us a call or schedule a meeting with an advisor in our office.