They say that the world is full of surprises, and there was none bigger than on the morning of November 9th, 2016 when Trump announced that he had received a call from Hillary Clinton conceding the election. The news was so unexpected that mainstream media channels refused to confirm the Trump victory until he was literally making his victory speech.
The overriding narrative is that this represents extreme turbulence. But are we talking about emotional or financial turbulence? Sure, some people are upset by the political events of the last few months, but there are also many people who are elated by how things have transpired.
With that said, the Trump economy is likely to be very different to the Obama economy. Trump has made it his mission to restore capitalism. During the campaigns, he presented himself as a populist, but this isn’t true populism. It’s more like a Randian experiment, complete with lower regulations, lower taxes, and individual economic freedom.
For investors, it’s an exciting time. How do you make an investment in such an environment?
Invest In Stocks
With the rise of Trump, capitalism is back in business. For that reason, we can expect the future value and profitability of stocks to rise over the course of his presidency. Companies will be more valuable and more competitive under the Trump regime. For this reason, individuals should be looking into private fund management so that they can benefit from the stock market gains so many expect. Government policy should remove the restrictions on business, allowing them to gain comparative advantage over their international competitors and increase their year-end profits. In fact, with the Dow going about the critical 20k mark, we already see the market price in these higher future earnings.
Trump Isn’t As Important As You Think
When the Founding Fathers first conceived of the presidential office, they saw it as a vehicle to preserve the freedom of the American people. Today, though, people view the president as some sort of God, able to control all the levers and knobs of the economy. However, the President doesn’t have such fine control over what happens. If he wants to get new laws passed, he has to get them put through congress. And Trump himself has no control over the decisions that Fed chairman, Janet Yellen makes.
Trump said in his campaign that he expected the economy was in a bubble that was about to pop. He’s probably right, given that the economy has experienced more than 9 years of expansion since the start of the great recession. He’ll try to do everything he can to prevent that, but he’ll still fail as the market corrects.
Turn Off The News
Thanks to the digital age, news has become something that is utterly ubiquitous. There’s just one problem: constant short-term reactions to every story can lead to short-sighted investment decisions. Seeing loss around every corner makes investors more susceptible to mistakes, which is why sometimes, it’s best to switch off your phone’s news feed.