With the election of President Donald Trump, we should be prepared for volatility in the investment markets. Since he has provided less detail about his policy positions than a traditional campaign, it may take some time for markets to sort out his priorities. Although, for the time being the market has digested the news positively.
What’s Happened So Far
Donald Trump’s surprise presidential election victory led to extreme market volatility in overnight trading since the market had already priced in a Clinton win. Futures were down over 800 points while votes were being counted and it was becoming clearer that Trump would win. But, we bounced back and ended the following day up over 250 points, hitting all time market highs. What we can be sure of is that markets are likely to remain unsettled in the near to medium term.
The Intrinsic Value of Stocks
In the end, the intrinsic value of stocks don’t change with the occupant of the White House.
What To Do Now:
In times of uncertainty, remember that panic is not a good investment strategy, and that it’s important to stick to your long-term investment plan. The very worst thing you could do, over the next few days and weeks, is make a temporary loss permanent by selling into the general panic or buying into over excitement. Follow this advice:
- Have an investment plan
- Be prepared for volatility
- Remember, the market will move up and down but it won’t always be in the direction you want
Accumulating Retirement Assets?
If you are accumulating assets for retirement with a long term time horizon the key is to stick to your proper allocation regardless of what is happening in the markets.
Preserving Your Assets?
If you are preserving your assets and approaching retirement, again make sure you are allocated appropriately and taking on the appropriate amount of risk.
Drawing on Your Assets?
If you are drawing on your assets, consider using a bucket approach and having your short term needs in cash so you are not forced to take money out if the market is down.
Use This Tool
To make sure your portfolio is matched with your comfort for risk you can use this tool: http://bit.ly/YourRiskNumber. It’s a good first step to help steer you in the right direction if changes are needed in your portfolio.