After a tumultuous and dramatic election season, we now face the reality that Donald Trump will be our next president. This election was certainly one for the history books and will be discussed for many years to come. Many polls, and even the markets were expecting a Clinton victory, so it came as a major shock when Trump pulled ahead late Tuesday night. The Dow futures plunged 800 points with the news and all signs pointed to a nasty open the following day. However, the equity markets fully recovered by the next morning and the Dow closed near a record high Wednesday afternoon.
Regardless of whether your preferred candidate won, you are probably curious and maybe a bit nervous about how a Trump presidency will affect the economy and your portfolio. While we can’t predict the future, here are some insights on what we expect.
What The Election Results May Mean for Your Portfolio
There are multiple factors to take into consideration when trying to determine what will happen to the markets in the coming days and months. In general, markets hate uncertainty and, as a result, are showing increased volatility as the world processes the Trump victory.
While no one can be sure which policies will be enacted once Trump takes office, based on his campaign promises experts predict more business uncertainty and slowed economic growth over the next few years.
Taxes
Trump has vowed to slash taxes for top earners and corporations, which could boost consumer spending and attract more foreign companies. It’s important to note, however, that tax revenues are expected to fall $6.2 trillion over the next decade, according to the Tax Policy Center.
Government Spending
During the election, Trump promised to spend heavily on programs that would create jobs in construction and steel manufacturing. He said his focus would be on transportation, water, telecom, and energy. This spending should create jobs and increase consumer spending overall.
Debt
Economists have feared that Trump's spending stimulus and tax cuts would increase the national debt by $5 to $10 trillion or more, according to a report by the Committee for a Responsible Federal Budget. Trump has countered that a growing economy would mitigate the deficit. Experts argue over whether the overall results will be positive or negative.
Trade
Throughout his campaign, Trump promised to increase tariffs on Mexican and Chinese imports, among others. This could raise prices for U.S. consumers and even trigger a breakdown in international trade, which could hurt U.S. exports.
Immigration
According to USA Today, undocumented workers make up about 5% of the labor force. If Trump follows through on his immigration policies, it could make it difficult for American businesses to find cheap labor and labor prices may increase as a result.
What Should You Do?
While this election season has been volatile and many have resorted to dire predictions and extreme emotions, we expect that the markets will follow historical trends. Remember that the White House doesn’t control the markets. There are always other variables involved that play a significant role in market movement, such as geopolitical events, oil prices, and corporate earnings. In any case, here are some critical points to remember during the current market volatility:
It pays to stay focused on the long-term.
A wise investor should tune out the everyday noise and stay focused on their long-term financial plan. We carefully build financial plans and investment strategies for the future, with short-term volatility in mind. While added volatility and uncertainty can be upsetting, there’s no reason to deviate from your long-term financial plan.
Now may be a good time to review your other accounts.
While the accounts we manage for our clients are well-diversified, now may be a good time to review your outside accounts, including 401(k)s and other assets, to assess risk and determine if any action is warranted.
We’re here to answer your questions.
When the markets become turbulent, it’s wise to have someone who can help you refocus on the bigger picture. An experienced investment professional can assist with navigating market volatility by ensuring your portfolio is invested according to your specific risk tolerance and financial goals. If you would like to review your current investment portfolio or have questions regarding the stock market, please contact our office. Schedule a phone call now! https://www.fidwm.com/p/schedule-a-phone-call
About Rocklin Senavinin, CFP®
With nearly 20 years of experience in the financial services industry, Roc has dedicated his career to helping individuals live comfortably in retirement and be able to enjoy the assets they have spent their career building. He is the founder of Fiduciary Wealth Management, a fee-only registered investment advisory firm in Little Rock, Arkansas. As a CERTIFIED FINANCIAL PLANNER™ professional, he has advanced training in the holistic process of creating a personal financial plan that addresses a person’s comprehensive needs for the short and long-term. Having built a successful career, he was named one of Arkansas Business’ 40 Under 40 in 2014, which honors intriguing business and political leaders under 40 years old. To learn more, connect with Roc on LinkedIn or visit www.fidwm.com. If you have questions, feel free to schedule a phone call using this link!