Bracing for the Trump dump

Bracing for the Trump dumpAs I write this, Donald Trump is on the brink of securing a historic US Presidential election victory.

Each candidate needs 270 electoral college votes; Trump stands at 244 and Clinton at 215. We expect Trump’s victory to be called by US television networks within a couple of hours.

As a company, we remain entirely neutral in a political sense. We do however have some concerns about how the US election might impact you and, in particular, your investment portfolio.

It is no secret that investment markets dislike uncertainty and this year has been packed with uncertainty, prompting a reasonably high level of volatility, albeit not unprecedented by any stretch.

A Trump victory is expected to produce a sharp negative stock market reaction.

Forecasters will probably adjust their numbers downwards, arguing there will be a Trump impact on economic and market confidence; not only in the US but globally.

In the longer term if Mr Trump manages to do even half what he wants economically it means more growth.

He would offer a substantial fiscal stimulus by both spending more and cutting tax rates.

Whilst he argues that the lower tax rates will bring in more revenue from more activity, that takes time to come through.

He wishes to offer an incentive to US large companies to bring back substantial cash from overseas, which could help with revenue on a one off basis and provide more company cash to invest. It would be better for shares than for bonds.

Periods of uncertainty such as this reaffirm the importance of holding a diverse portfolio, tailored to your individual circumstances and personal risk tolerance.

From this perspective, we remain confident that our clients’ investments are well positioned to ride out any market turbulence, regardless of the outcome.

We do remain focussed on the long term outlook for the investments held on your behalf: we invest rather than speculate. Accordingly, it would be inappropriate to trade around the market volatility.

There is a range of scenarios that could materialise, each of which would generate winners and losers. As these scenarios take shape, we will of course seek to identify long term investment opportunities.

If you have any concerns whatsoever about the impact of a Trump victory on your investment portfolio, please do call your Financial Planner at Informed Choice.


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About Martin Bamford

Martin Bamford is a Chartered Financial Planner, Certified Financial Planner (CFP) professional and published personal finance author. He works with elderly clients to provide advice on funding residential care fees, hosts the Informed Choice Podcast and is a keen ultra runner.
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