Posted by Jill Boynton on November 10, 2016
They say that the markets hate uncertainty. The election of Trump last night as our next president at least brings some certainty back into the markets, but adds to it through many unanswered questions. What will his administration do with the Affordable Care Act? Will he build a wall around our border and restrict global trade? Will Russia attempt to assert its strength on the US?
These unanswered questions leave many investors afraid, and the markets may reflect this in the next few weeks. Essentially nothing has changed for the moment. So if there is an emotional reaction the markets will inevitably calm down and resume more normal moves. After all, company valuations depend on much more than who is in the White House. Other factors such as the health of the company itself and the current domestic and global economic conditions affect the price of a stock. We won't know how a Trump administration will affect the economy for a long time, so reacting to anyone's guess of what might happen is akin to pure speculation. Even though he will take office in 2 months any policy changes will likely not happen for months, if not years, into his administration.
We have always cautioned our clients to look at the long-term picture and ignore short-term gyrations. Let us be steady and calm and not react to the panic. Please feel free to call us if you want to talk.