What Donald Trump Means for Your Portfolio

donald-trump

First, I want to apologize. I haven’t had enough free time to devote to blogging this past week because I moved from Alabama back to the good old state of Texas. I’m almost settled in to the new city so I will have time to up my time to blogging more. I will never quit or stop blogging so do not worry about that!  A lot of things happened in the past week (ahem, Trump) and I have a few opinions about Trump’s rise to presidency.

Donald Trump

So Trump actually pulled it off. He became the president of the United States. He arguably holds the title for the most powerful man in the world for the next 4 years. Every poll that you could find said that Hillary was the clear favorite. It led me to believe that Hillary will actually become the president by a landslide. Boy are polls wrong.

With Trump’s remarks about women, I assumed that almost no women would vote for Trump. His “triumphant” remarks about how a woman’s best asset is her looks and “when you’re a star you can grab them by the p***y” led me to believe that he’s alienating 50% of his voters. I told my friends that maybe 10% of the women will vote for him. I was dead wrong.

According to CNN, 53% of white women and 25% of Latino women voted for Trump. Trump’s defense was that his comments, no matter how lewd, showed his authenticity. I, for one, believe that the content matters the most in a message than how the message is delivered. Even if it’s authentic, it’s destructive authenticity. Obviously, not everyone thinks this way.

trump

That’s why democracy is so great! My personal beliefs are not what other people believe. I got to see that my predictions were wrong and how other people react to situations. Maybe that’s what Hillary was missing. Authenticity. Her words sounded scripted (at least to me) whenever she was doing a speech. Furthermore, Clinton received previews of some debate questions prior to a couple of debates.

Since she received questions in advance, it’s not hard to figure out that she rehearsed the answers to those questions beforehand. Even listening to her final speech talking about her loss sounded scripted. When you listen to Trump’s speeches it’s very hard to be convinced that he memorized the answers to the questions.

Trump and Your Portfolio

Enough about the election and voting, let’s get down to what a Trump’s win will mean for your portfolio. Since the day the election outcome was announced, banks, the Dow, education lending companies, and more have risen significantly. Think 10%+. Gun stocks have plummeted.

As a result of this Trump effect, you’re probably wondering what it will mean for your equity portfolio. Should I switch from equities to cash for my 401k? Trump will end the world so who cares about investing? What are the hottest stocks that I can swoop up? These are the wrong questions to ask.

The election process happens once every four years. It doesn’t happen often enough for it to be a normal event you need to rebalance your portfolio for. In fact, what you should do is what you’ve been doing. Change nothing.

Trump Doesn’t Have Anything On My Portfolio

The two BIGGEST factors that go into having a successful portfolio is time/participation in the market and regular contributions. If you think about these two factors, I honestly don’t think it matters what price you enter the investing phase. I’m not talking about individual stocks. The price you enter at matters for individual stocks. I’m talking about the market as a whole, S&P 500, Dow, NASDAQ, etc.

For example, I’m petrified starting to invest when market valuations are at the highest it’s ever been. Buying high isn’t always a good strategy. I typically avoid investing in something when the price is near the daily high. However, I’m putting my fears aside and contributing to my 401k. Enough to max it out. Way more than any of my 22-24 year old coworkers (about 2-3 times more than the average).

Am I changing my  contribution amount or doing anything different with my 401k? Absolutely not. Over the next 20 years, I expect the S&P to return 7.5% a year on average. I have faith it won’t let me down.  

The reason I have huge faith is because America has a workaholic culture and I don’t expect it to change. More  hours worked as a whole country = better economy. Chasing the American dream isn’t dead and I don’t expect it to die off anytime soon just because Trump was elected. 

Conclusion

The election is a powerful force. It moves markets up and down even before actual laws will be set. A person’s words plus with the media distributing those words as fast as possible means people will react with their investing money. While it may feel like you’re on top of the world if you’re on the right side of the trade, panicking and selling if you’re on the wrong side of the trade isn’t a smart choice.

Remember Brexit and how quickly things changed course. Equities sold off at a record pace for about 3 days following Brexit. Everyone thought that the world is doomed. Globalization would be dead and trade wouldn’t be as feasible. Look at where the stock market is at now. All time highs. Events will be smoothed out eventually over the long term.

Readers, are you changing your portfolio or doing anything different when it comes to investing? Are you rebalancing or switching investment picks? Let me know in the comments below!

Disclaimer is that I am not a stock professional and you should always do your research before committing to an investment. 

Finance Solver

I grew my net worth to $40,000 as a college student through hard work, discipline, and a little bit of luck. I graduated college in 2016 and will be starting to plan for my retirement once I start working.I am planning on reaching financial independence by my early 30's and I will document my moments of inspiration all the way to desperation here.

My goal is to enable your success in personal finance so that you can realize the American dream. The first step is starting today!

Read more about me here.

Latest posts by Finance Solver (see all)

3 thoughts on “What Donald Trump Means for Your Portfolio

  1. Welcome to Houston! Trump’s election still feels surreal to me and like you, I wasn’t expecting such a broad support.
    We will know the impact on our portfolio in 4 years and really, we’ll just have to ride the wave like everyone else. Nothing changes on my portfolio for now, expect, as you suggested, more contributions.

  2. I’m not changing anything about how we invest. In-fact we are about to start ramping up investing – it doesn’t matter what the market is doing as far as we’re concerned.

    Trump isn’t going to be an average president. I think he’s either going to be one of the best (?!) or one of the worst. Unless he backs down on nearly everything he’s said he was going to do.

    Tristan

Leave a Reply

Your email address will not be published. Required fields are marked *