It appears that Donald Trump will be the next president of the United States. Regardless of how you voted, you may be wondering as an investor what the election outcome means for your investment portfolio.
Historically, presidential elections haven’t affected the markets in the long term. That’s partially due to the fact that the president is one person, and it’s more likely that the government will react to the markets than the other way around! Plus, markets are efficient, so any short-term volatility will likely even out. Prices take into account not only the election results, but also a host of other factors.
With that said, even as the markets swing because of Trump’s election, please remain calm. You are in it for the long haul.
So what are the specific implications of Trump’s win on your investment portfolio? Here’s my perspective, based on reading a variety of articles:
1) Buckle up. We will continue to see short-term volatility in both the domestic and international markets.
2) Volatility often means a “flight to safety.” U.S. Treasuries and bond prices will go up, while yields go down – at least in the short term.
3) Commodities such as gold, other precious metals, and oil should increase. Natural gas positions may decrease with Trump’s pro-coal rhetoric.
4) Emerging market equities will likely suffer. The Mexican peso has already taken a nosedive.
5) Infrastructure spending will increase. Therefore, infrastructure stocks (including construction) should outperform over the long-term. This is also positive for real estate developers.
Those are my predictions. Remember, it is just an opinion. For investors who have the financial leeway to be opportunistic in this volatile time, take advantage of it. For everyone else: focus on long-term goals and asset allocation. Investment Policy Statements are especially important – they remind you of a broader investment strategy and decrease the likelihood of making short-sighted decisions.
If you don’t have an Investment Policy Statement but want to learn more, please let’s talk. Here’s a link to schedule a complimentary 30-minute consultation.
Deb Meyer, CPA, CFP®