Donald Trump is President-elect of the United States of America. This election reminded me of the Brexit vote across the pond earlier this year. An entrenched power bloc assumed it had already won, but woke up the day after the election to a powerful reminder of the world outside of their ivory towers. I voted and I hope you did, too.
So What Does Donald Trump Mean For The Markets?
It means the uncertainty over who will be President is over. No kidding, right? It is cliche by now, but the market does hate uncertainty and knowing who will be in the White House allows companies to eliminate a variable from their business calculus. You don’t need to be a genius to navigate your portfolio through an election cycle; you need patience and informed optimism. Even smart people screw up and overreact to short-term blips. Nobel laureate Paul Krugman of the New York Times had this to say at 12:42am on election night as stock market futures plunged: “If the question is when markets will recover, a first-pass answer is never.” The markets recovered within 12 hours. Bloomberg interviewed a 35 year old tech worker in San Francisco before the election who said he sold his entire portfolio for fear of an economic depression due to a Trump victory. I strongly urge you not to invest according to your politics. I think we would be bumping up against all time highs (you know the market has been up since the election, right?) regardless of who won. The President doesn’t control the stock market.
I don’t know what the market will do tomorrow, the next day, 1, 3, or 5 years from now and no one else does, either. If someone says they know, they are trying to sell you something.
I mentioned ‘informed optimism’ earlier and I suggest this as a default investing attitude. Whether you’re 30 years old or 60, you still likely have a timeframe measured in decades, not days. Day to day, the market can go up or down, but over the long term, it is reasonable to expect investments to compound no matter who was in the White House 10, 15, or 20 years ago.
I particularly like Twitter to fill out the informed portion of informed optimism. Sure there is a ton of noise and there are jerks on Twitter, but tracking down reasonable thinkers of various political and investing flavors is well worth the time. It is easy to filter out bad actors and unreliable sources. Solid follows will lead you to other worthwhile voices.
Final Election Thoughts
Pundits and legacy media don’t seem to have learned the lesson of Brexit and Trump, speculating on the horrors sure to follow in the wake of the elections. Are they really afraid of Trump? Or are they afraid of losing your attention after their colossal blunders in predicting the winners? What do we need these people for now that they have been so thoroughly discredited?
This post from Josh Brown is worth reading: We got it from here.