The Election and the MarketsSubmitted by InFocus Financial Advisors, Inc. on November 9th, 2016
Election: We have a new President of the United States. No matter who you might have voted for, here are some ideas to keep in mind:
- Markets do not like uncertainty. It may very well be the 'uncertainty' that comes with a Trump presidency that the markets don't like vs. his policies etc. It is likely that the markets don't think Trump is a major threat to our economy. The markets simply do not ever like uncertainty.
- We are invested in stock companies, not political leaders. Stock companies will keep selling computers, cars, shampoo, tax-services, chocolate, and cell phones etc. and making money. While stock prices will almost certainly be disrupted over the coming days and maybe weeks, the world will keep turning. Stock companies adapt and thrive over time.
- Economic forces historically win out over the daily news bytes and noise. Corporate profits have recently turned a corner in the positive direction over the last quarter, after seven quarters of declining profits. Wages were reported increasing again last week. So after reaching full employment, we needed wages to increase to lead to more spending, and hopefully a continued growth trend in corporate profits and stock prices. These trends did not change due to the election. If the trends continue, we could see a very good coming year.
- Generally Donald Trump's policies are pro-business. So from a strictly economic and "How will the stock market perform?" point of view, new policies can be very pro-business, and good for our stocks. I do realize there is much more to the world than stock prices and many issues are at stake, but we're managing your portfolios and pro-business policies are historically good for your portfolio. Less government regulation, potentially better international trade deals, and infrastructure spending are expected. We shall see.
- Historically, these market disruptions that are mostly based on 'uncertainty' are short-lived. It may be a few weeks or even months, but the underlying economy is still strong.
We have a plan for times like these. We will closely monitor market events and be in touch. Please call or write if you have additional questions or concerns.
Eric W. Johnston, CFP, AIF