The end result of a polarizing presidential race certainly rocked the boat called Wall Street this week. The markets responded as they almost always do when Uncertainty Rules – they proceeded to quake and quiver. As we have seen repeated in history, for example: 9-11, and Brexit, unexpected, contentious events often cause overreaction from investors. The fact is, a Trump win was not factored into the market, causing a reactive flee to safety. This is not unusual or surprising to AAFCPAs Wealth Management. As we know, the resulting waves were enough to make any investor queasy. Yet despite the immediate volatility post-election, here we are, a few days later, with the markets up again and the Dow reaching a new intraday high Thursday.
The President-elect has made many promises on how he plans to change the world, including: trade regulation, tax reform, immigration policies, investment in infrastructure, among others. Investors are smart to be a little cautious, with so much recent disruption and unknown change ahead. Additionally, since many never felt Trump would win the bid, his policies have not been thoroughly vetted, causing further investor unrest. Due to these recent events, AAFCPAs Wealth Management feels uncertainty will continue to reign in the short term, at least until we see President-elect Trump in the oval office, moving forward on his promises, creating a calming presence, with positive worldwide and financial change.
As it relates to the market, we consider this recent Presidential surprise a parallel to Brexit. Brexit was an unexpected event, which also caused initial investor panic and volatile market conditions. The pound lost value quickly, but recovered shortly thereafter. In the case of Trump’s unanticipated win, the market and dollar took a heavy hit as the shock waves hit. In parallel, we are now seeing the anticipated recovery.
In addition, as a result from the recent investor reaction, the lower dollar may be a positive to business and the export market in the future. Interest rates should remain stable for the near term, and investment in infrastructure may help with domestic jobs growth. These potential positives may be contributing to the market rebound and stabilization.
AAFCPA’s Wealth Management advises clients to continue to follow your long term plan and stay the course. Most intermittent turbulences eventually resolve themselves to the positive. We are believers that the best route to financial wellness is to weather the storm of short term volatility, until the true facts come to light. Wealth decisions made with foresight, focus and clarity, combined with your factual and up-to-date life information help you achieve your short and long-term financial goals with the least amount of risk.
If you have any questions about your investment strategy, kindly reach out to your AAFCPAs Wealth Advisor or Joel Aronson at 774.512.4114, firstname.lastname@example.org. Our mission is to provide valuable peace of mind to those who have the awesome responsibility to manage wealth.
The AAFCPAs Wealth Management Team