The Election is Over, What Does that Mean for My Finances?

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Will I Lose or Win With the New President?

Whether you were a Trump or Clinton supporter, the outcome of this election may have raised questions in your mind about what might be the effect on your investments and the markets, and the economy in general. My email box is filling up with white papers, webinars, commentary and other communications about what to expect next, how the markets will be moved and who the winners and losers will be under a Trump administration. Some people are screaming to buy certain sectors that will win and to sell other investments that will lose. Gold is going to go way up…or actually go way down. Interest rates will rise, or maybe they will drop in a “flight to safety.”

What You Can Expect in the Coming Year

If you stayed up late watching election results, you may have heard that Dow Jones futures were down 800 points at one point. As I am writing this, the Dow Jones Industrial Average is up 270 points. That is over a thousand point swing in a few short hours. So what is the message the stock market is telling us and what will that mean for other assets like real estate and commodities. Many folks think that the stock market is a predictor of what is going to happen 6 to 12 months down the road. So what was the market telling us is about to happen? The only conclusion that can be drawn from this kind of volatility is that there is great uncertainty over what will happen for our economy in the coming year.

What You Can Do Now

If there is nothing but uncertainty to look forward to, what should individuals do in order to get through the period? Here are a few suggestions, depending on where you are in life and how you approach investing.

If you are a trader, there will probably be a lot of volatility to look forward to. Volatility usually creates short term opportunities that a trader can profit from, both in up and down markets. Just make sure you don’t turn your back on the market or you could get hit hard in a very short period of time on both sides of the market. 

If you are within 5 years of retiring (before or after), make sure the money you are living on or will be using for income over the next 5-10 years is not exposed to markets that are experiencing these violent swings. Remember, this is the time in life that losses could ruin your retirement security.

If you have 10 or more years from needing your money, then use the volatility as an opportunity to make adjustments to your portfolio. If you invest in stocks this is something that should be done at least yearly as winners and losers identify themselves as the economy and technology evolve. Harvest tax losses and use them to offset gains in positions that may have peaked. A lot of very popular companies are seeing their outlook for growth diminish dramatically. If you invest in mutual funds, check to see if your managers have changed or if their performance pattern has been altered.

If you just plain feel nervous and stressed over the volatility and future prospects, then move to assets and strategies that include guarantees or significant security because of collateral. I have said many times that you should be using investments and strategies that help you to sleep better at night, not keep you up. I have written about this previously. Now may be the perfect time to get rid of assets that make you nervous and investigate strategies that avoid the roller coaster effect. I used to love roller coasters when I was younger, now they just make me feel nauseous, so I don’t ride on them anymore. Take the time, listen to your inner voice and most of all, keep your eyes on your destination. This will help you to not become too distracted by the short term news and gyrations.

Only Time Will Tell

We don’t know what the long term effect of a Trump presidency will be, only time will give us that answer. What we do know is that there have been many nasty, hotly contested campaigns for President of this country. There have been many that had controversial results that have divided the country the day after. The thing I can take comfort in is that we have survived and grown as a country after previous elections. The busses and trains still run, there is food in the grocery store and most of us went on to our regular activities today like work, school, doctor’s appointments and the like.

Let’s Talk About How You Are Feeling

If you are nervous, concerned, confused or just want to vent, feel free to give us a call. We can schedule a time to talk and there will be no charge for a 15-20 minute call. We are a strong country full of great and talented people. If we can keep that in mind and ourselves involved I am confident that we will be successful.
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