This morning, headlines are intently focused on Donald Trump’s win and many are wondering what impact, if any, the results may have on markets and investors. Regardless of the election result, history indicates that markets are resilient in the face of any one event.
Markets are now adjusting to this surprise and it looks like the US will open down roughly 2% this morning. I wanted to quickly highlight a few things to keep in mind:
Governments still hold checks and balances: For those concerned about a ‘rogue actor’ as President, Trump will not simply have a blank cheque that he can write. Policies and changes will still need to be scrutinized and passed.
Any changes will take time: New leaders do not hit the ground running and require some time to transition into the role. So it is not likely that suddenly, the underlying economy will begin to falter just because of the result.
Companies will still do what they do: People will still go to the store and purchase goods and services and companies will still be around to provide them.
Don’t panic: At the market open, most of the initial ‘damage’ should be done and I think selling or chasing an asset such as gold or the Peso to play the election surprise is just that, chasing returns.
For all of the headlines and uncertainty surrounding this election, the American economy still reigns supreme, rivaled only by China. Past trends dictate that market turmoil is not unusual in years when a new president is elected and investors should remember volatility is often only perceptible in the short term.
When it comes to intelligent investing, a diverse portfolio is a strong portfolio. No one asset class or geographic region can be a winner all the time. A great strategy for succeeding over the long term is to balance your investments throughout a range of classes.
The American presidential result is interesting indeed, but that doesn’t mean Canadian investors should give in to unnecessary concern or throw caution (and sound investment advice) to the wind. The long and short is to remember this election is merely a momentary blip on the radar.
For unbiased, objective advice on your financial health, contact me at firstname.lastname@example.org, 705-798-0062 or 416-230-2703