What A Trump Presidency Means for Financial Markets

Oh, that star-spangled banner

Oh, that star-spangled banner

The die is cast, the votes are in. Donald Trump, in a shocking upset, is our nation’s president elect. Depending on which side you lean towards and how far, you’re either celebrating with a slew of social media posts, bemoaning your loss among colleagues at the office, or somewhere in between.

Regardless of which side of the fence you’re on, many investors ask: “What does this mean for my investments?” I’m here to tell you today that it likely means nothing.

I could present a mountain of data showing how Democrats help financial markets, and another conflicting mountain of data showing how Republicans are really the ones to carry the torch. For every economic report stating one view, there’s another right behind it with the opposite view.

I can’t tell you what’s what and who to listen to, but I caution you against anyone who says that they know the consequences, for better or worse (especially your Uncle Joey who sits around watching political commentators all day). No one really knows.

America-Loving Optimist

On that note, I want to say a couple of things. First, when it comes to financial markets and the growth of businesses in the future, I’m an optimist. We live in a great country, and I believe our country’s businesses have and will continue to have remarkable opportunities for growth, whether through improved efficiencies in manufacturing and online businesses, or substantive innovations, such as automated cars, which are on the horizon. This is America, dang it, and America is full of bright academicians, strong businesses, and hard working everyday folks.

Global Portfolios, Global Economies

Second, we live in a global economy, and many investors I know have investment portfolios reflecting this global economy and its growth potential.  They not only invest in American companies (through mutual funds), but companies in Brazil, Mexico, Germany, France, Indonesia, India, Japan, Denmark, and dozens of other countries, each with it’s own economic, monetary, and political system. Each with companies seeking to innovate, improve, and grow.

So what should you be doing amidst the uncertainty? Well, let me first talk about what NOT to do:

  • Don’t re-evaluate your investments based on the opinions of the aforementioned “Uncle Joey” who saw political doom on the horizon and now knows what’s best for your financial future.
  • Don’t sell your investments and wait for “better times” when the president of your choice gets elected.
  • Don’t completely change your long-term financial plan based on this single election, in this single country, at this single point in time.

Instead of these and other extreme measures that likely won’t get you anywhere, here are some things I would suggest:

Remain Calm

Elections have happened before and they’ll happen again. Just because this election may feel different to you, with more passion and vitriol than ever before, doesn’t mean that it’s different for everyone else in the country or for the world at large.

Still, this has been a highly charged emotional year. Frankly, I can’t think of a time with more energy than this presidential election. Unfortunately, emotion can motivate us to make hasty, poorly thought-out changes in our financial lives. Don’t let your emotions push you into something you’ll regret down the road. Stay calm.

Stick to Your Plan

If you felt comfortable with your financial plan a year ago, ask yourself if anything has really changed that much in your situation to require a change. Has your retirement account suddenly changed from an investment of decades to a few years? No? Then stick to your plan.

I know that may sound trite, but it’s truly the best advice I can offer. I know too many people who made hasty investment decisions in the market crash of 2009 and their portfolios have never recovered. Just remember your plan and stick with it.

Presidents will come and go. Sometimes you’ll love them, other times you won’t. Don’t let your feelings toward one elected official derail your investment plan that is meant to go on for far longer than four years.