In this article:
By Lyndsey Douglas
What you need to know about a Trump presidency and your investments
With the power of news cycles these days, deeply integrated financial markets often act irrationally, influenced by panic. It is important for investors to remember the fundamentals of their investment portfolios: remain clear on your long term goals, do not react emotionally and seek professional input from your financial advisor.
Remember, selling in response to sudden falls in markets merely locks in a loss. The noise generated through media outlets will make adherence to long term investment strategies difficult, we understand this. So, stay strong and keep your eyes peeled (alongside your financial advisor or wealth manager) as often such scenarios throw up the opportunities.
Share markets literally move up and down in response to macroeconomic events momentarily day in, day out. Today’s Trump victory has certainly shocked global markets and caught many investors unaware. Financial markets did not want to see a Trump presidency; his win was considered less probable than a Clinton victory and as a result markets only partially priced this in earlier today. Therefore, we expect a pronounced negative impact, which we observed throughout the day as the results streamed in, with adjustments and revaluations across all market segments. However, this isn’t the first bout of volatility our markets have experienced: periodic sharp falls are regular occurrences in share markets throughout history. So too, data and history show us that ultimately shares rebound from these short term shocks with stable returns when the dust settles and normality prevails in asset markets.
Even in the lead up to Election Day and Night, markets had been somewhat jittery at a potential Trump victory.
The ASX200 dropped nearly five per cent over the last fortnight and the S&P500 fell approximately three per cent over the last week and a bit. The market is expecting a potential five to ten per cent sell off as a knee jerk reaction, but with a Brexit style recovery afterwards.
Remember, your Yellow Brick Road wealth manager is your best port-of-call regarding your investment strategy and the impact of such events.
They’re only a phone call away.
Investor enquiries and media contact:
Lyndsey Douglas - External Affairs
Yellow Brick Road Holdings Limited