When it comes to Presidential elections, the stock market also gets a vote.
Consider an article in the September 30, 2016 issue of “The New York Times.” Published after the first presidential debate and titled, “Debate Night Message: The Markets Are Afraid of Donald Trump,” the article cites research that shows “the market prefers the Democrat and believes Mr. Trump is a unique threat to prosperity.”
This fear, the researchers believe, could translate into sharply lower stock prices with the election of President Trump. Conversely, if Donald Trump losses, which seems likely right now, it could be good for the stock market.
The election of Hillary Clinton could also roil the markets. On October 11, a down day in the stock market, an analyst on CNBC suggested that one of the causes for the drop that day was the increased likelihood of a Clinton presidency, which could mean increased regulation on financial institutions, drug companies, and energy providers.
All positives for us, in my opinion, but potentially negative for stocks in these sectors.
With so much unknown and unknowable, it is difficult to develop a singular strategy. Here are some thoughts:
- Don’t make changes in your portfolio due pre-election fear-mongering. [I’ve already received an email recommending that I “Trump Proof” my portfolio by buying gold.]
- Though this is an election like no other, the fundamentals still apply: be diversified and try to have enough in cash to ride out any dips in the market. You don’t want to be forced to sell at an inopportune time.
- Remember — we’ve been through bad times before and the markets have always recovered. The steep drop and rapid recovery before and after the Brexit vote is the most recent example, but the same dynamic applied with the “Fiscal Cliff,” the “Greek Financial Meltdown,” and every other crisis du jour.
Given a little time, these stomach-turning moments are only blips in the market’s long-term rise.
Of course, if you feel that your investments do not suit your temperament or your long-term goals, please get in touch.
As an hourly financial planner, I do not sell stocks, annuities, or any other financial products. I receive no commissions and have no “investable minimums.” In other words, I am 100% objective and 100% committed to putting your interests first.
With a financial plan, you’ll know how much, or how little, you need in stocks to reach your goals. So y ou can make investment decisions based on facts, not fears.
The best way to start? A no-cost “Get acquainted” or “Get an update” meeting. If you like my approach we can work together in person, where possible, or with online meetings, email, phone, even US mail.
I look forward to hearing from you.