OK, so I’m going to tell you something you may never have heard from a Financial Advisor before – I WAS WRONG. That’s right, I used my 21 years of industry experience, all my brilliant reasoning powers, did a lot of research … but still came to the wrong conclusion.
What about? Well, the recent election was a big question mark for investors. After careful consideration of the likely outcome (and its effect on markets) I correctly concluded that Donald Trump DID have a decent chance of winning and that the media/pollsters were likely way off in their assumption that Hillary Clinton would almost certainly win. Nope, I was not surprised to find out at 2 am November 8th that Trump had won. To be honest, I wouldn’t have been shocked if it had gone the other way either; I thought it was about a toss-up.
What does this have to do with our investments? Well, I absolutely expected that if Trump won (which was a distinct possibility) the world markets would take at least a temporary nervous posture and risk assets would drop in value for a time. No, I wasn’t foolish enough to say how much or how long they would be down, but I admit I thought they’d be down. Markets usually don’t like uncertainty, and I’d say most “insiders” think Trump is about as much uncertainty as we’ve seen in the White House. As we now know, the world markets started to drop significantly late on election night (I believe the Dow Futures were down about 800 points at one point overnight) only to rebound that next day. The U.S. stock markets have shown strongly ever since the election really.
So, there you have it. I misjudged investors' reaction to a Trump win. It would appear that investors like his pro-growth message and trust at least some of the reforms he has discussed to regulations and taxes can be beneficial to businesses. While I don’t doubt that may be true, I still wonder if there will be a letdown at some point when reality sets in… reality in the form of the House and the Senate and what it really takes to make meaningful change in Washington. Also, with President Elect Trump continuing to comment on specific U.S. companies in a very public way, could the attitude of investors change in the coming months?
We’ll see. For now, I’ll admit I was surprised with how the markets reacted, short term. Now, at Hamilton Wealth Management we always advocate taking a longer term view of the market and don’t believe we should react drastically to short term events. That being said, I believe in taking ownership of my decisions and so far I missed this one. I like to think I’m right more often than I’m wrong, but I’m not above admitting I was wrong from time to time.
The views expressed are those of THOMAS HAMILTON and not necessarily the opinion of LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
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