Trump’s America: What does this mean for my finances?

User Written by Joseph Regan on November 21, 2016.

Trump’s America: What does this mean for my finances?

On the night of the US presidential elections on November 8, right after Florida was painted red on the electoral map, impossible became reality. Donald J Trump, the real-estate, reality TV, billionaire super-star, secured a strategic lead over his Democrat rival. Several hours later Hillary Clinton conceded, giving Trump the title as the 45th President-elect of the United States of America.

Futures on the US stock market predicted losses up to 1,000 points, and the US dollar began tumbling quicker than the fall of Trump University. It was inevitable that Trump’s astonishing victory would throw the country into death spiral, creating a financial crisis that’d make the Great Depression look like a hiccup.

Certainly, the end was near… or was it?

Since the election, CNN reports that the "yuge" Donald Trump market rally continues. In fact, here’s how the US market has performed the week after Trump’s victory (taken from the same CNN hyperlink highlighted in this paragraph):

  • The Dow rose 218 points Thursday and closed at a record high for the second day in a row. This is the Dow’s best week since 2011.
  • Stocks have historically gone down the day after Election Day. It hasn't mattered much if it was a Democrat or Republican winning, if the incumbent party (or president) was re-elected or if the outcome was considered an upset.
  • According to data from Jeff Hirsch, editor of the Stock Trader's Almanac, the average decline for the S&P 500 the day after Election Day between 1932 and 2012 was 1.1%. But the S&P 500 rose 1.1% on Wednesday.
  • The market only rallied on 6 of the past 21 post-Election Days.
  • Stocks even fell in 1980, after Ronald Reagan, the hero of the modern Republican Party, defeated Jimmy Carter. And the market dipped nearly 1% after Reagan's landslide win over Walter Mondale in 1984 as well.
  • Stocks plunged 5.3% in 2008 after Barack Obama was elected. Of course, those were unusually tumultuous times for the market and economy. But the S&P 500 also fell 2.4% after he beat Mitt Romney in 2012.
  • Shares of many banks, drugmakers, oil companies and construction firms all rallied sharply Wednesday and rose Thursday [after Election Day] as well.

As you can see, it seems that the pollsters have been proven wrong again in 2016. Now, I’m not saying that Trump is the be all end all; there will certainly be market fluctuations over the next four years. But we have to realize that it’s impossible to beat and/or predict markets, elections, or just about anything else in life for that matter.

What we can do, however, is stay calm, don’t panic, and keep investing. Investors were faced with a similar situation this summer when Britons decided it’d be best for their country to part ways with the European Union, creating a mini panic. But those who have been the most successful since Brexit are the ones who didn’t sell, didn’t panic, and didn’t liquidate their investments. The same will probably hold true with Trump as the Commander in Chief.

So while phones continue to ring off the hook and emails flood the network, my best advice to everyone is to sit back, take a deep breath, relax, and keep investing. We cannot and never will be able to predict market swings, but with professional advice, an actively managed portfolio by industry experts, and patience, we will accomplish our future financial goals.

Joseph Regan

Joseph Regan

Posted on November 21, 2016 in American Expatriates.