Looks like Donald Trump will be the new President of the United States. Don’t think anyone saw that coming. The polls were way off.
The world markets panicked, and it looked like U.S. markets might do the same, but then investors realized what everyone else is slowly figuring out. We don’t actually know what Donald Trump is going to do as President, and whatever it is that he does do, it won’t happen until January 2017, when he gets sworn into office. Even then, this isn’t an instant sort of thing.
So, what should investors do regarding a Trump Presidency?
As always, long-term investors should do nothing more than confirm that they have the right diversified portfolio setup for their risk tolerance.
For shorter-term investors, there might be some increased volatility. The markets hate an unknown, and right now Trump is an unknown.
However, there are plenty of things to deal with before that. The holiday shopping season is coming, and how it goes (or seems to be going) is going to be a big indicator for how the economy is doing. Retailers can expect a big boost, or a pretty decent beating depending upon whether holiday spending is up or down. The, of course, comes the Fed’s looming decision on interest rates. Before the election, it seemed like the Federal Reserve was pretty much certain to raise rates in order to get at least one increase in during 2016. But, if the markets and the rest of the U.S. economy look a little too skittish after the Trump election, they might be forced to wait until early next year.
Resist the temptation to invest in stocks that you think will benefit from President Trump’s policies. Nobody knows which of those policies will actually come to pass during the early years of his administration, or what those policies will actually look like. It will be at least 12 to 18 months before anything has the slightest reaction to a changing administration.
As always, keep calm and invest with your head, not your gut.