Needless to say, the result of the US election was a bit of a surprise. While polls leading up to the vote showed it was a close race, the odds appeared to be in Hillary’s favour to win. Shortly after results started to flow in, it soon became evident that Trump was building and maintaining the lead.
Global markets reacted significantly with gold rallying almost 5%, the Tokyo Nikkei dropping over 5% and US futures dropping a similar amount at their lowest point; however, cooler heads prevailed on Wednesday and both North American and European stock markets closed up from 0.7% to 1.5%.
Leading up to the election, many commentators and the media painted an apocalyptic view of a Trump win, however the world did not end on Wednesday.
Looking back, the US markets displayed a more fearful reaction to the Obama win in 2012: both the S&P500 and the Dow Jones Industrial Average closed down -2.4% the day after the election.
Did the Obama win warrant such a drop compared to the rally we saw with Trump? This is just one example in history that proves markets are unpredictable in the short run and that following an investment roadmap is more prudent than trying to outguess the markets.
Throughout the long and nasty election campaign, which seems to hit a new low during each election cycle, we must not forget who the intended audience is of all of the mudslinging and political rhetoric.
While many found Trump’s campaign distasteful, he will now have to lead within established domestic laws, international treaties and diplomacy, and the entrenched political system.
Although Trump says he is a political outsider and will shake up Washington, he will undoubtedly surround himself with experienced advisors.
There is a significant unknown surrounding Trump and only time will tell which campaign promises/policies he will try to enact, when and to what extent. While this is similar to any new government, the global concern seems to be amplified this time around given the extent to which he says he wants to change direction.
As investors, we must look past all of the noise and not react based on emotions, whether that may be the fear of the unknown, disgust or any combination thereof; decisions need to be made with a calm and objective long term focus.
Even though we do not attempt to time the market, we have and will continue to make strategic shifts in response to longer term trends that we identify. Having a professional portfolio manager to help you navigate through market noise is one part of a prudent financial plan. Please contact one of our Wealth Consultants if you any questions about your financial health.
All examples are for illustrative purposes only and are not intended to provide individual financial, investment, tax, legal or accounting advice. This material is for general information and is subject to change without notice. Every effort has been made to compile this material from a reliable source. However, we cannot guarantee that information will be accurate, complete and current at all times. Before acting on any of the above, please make sure to see a financial professional for advice based on your personal circumstances.