Riding the ‘Trump Rally’
Whether rally or valley, just make sure to ask yourself the right questions…
Prior to the Presidential election last November, the financial media would have had you believe that the election’s outcome would determine the rise or fall of the investment markets. And, while attempting to match the hype of the campaigns, they made it sound as if your entire financial future depended on who was elected. The general consensus was that a Hillary Clinton victory would avoid the uncertainty that markets hate. Yet since the victory of Donald Trump, the U.S. Stock Market has increased over 10% (as of this writing).
Yes, the markets don’t like uncertainty, but as I wrote in a pre-election column neither do elections have as much predictive impact on the markets as the “experts” (or the candidates themselves) would have you believe. You must consider that after every election, half the country is happy and half is upset. The delineation doesn’t blur much with investors — the big Wall Street institutions nor your co-workers investing in their retirement plans.
Markets might benefit here and there from a spirit of confidence, but largely have a mind of their own. It’s hypothetical at this point, but maybe the same rally would have also happened under Clinton. That’s why I encouraged you pre-election not to get too carried away. The same holds true now after the so-called “Trump rally” of the last four months. What’s up today could just as easily be down tomorrow.
Focus on the questions listed here — these are the ones that really matter.
What’s my plan?
First, make sure you have a financial plan that outlines what’s important to you and strategies to address these priorities — both short-term and long-term. Included in that plan should be an investment strategy NOT built on how you are feeling or what the “experts” are saying or how the market is doing. A solid plan should be built on principles that are consistently right, relevant, and remain aligned to your specific priorities despite the noise and emotional pull.
What does this mean for you?
When markets are up so are the “glory” stories. Your co-worker made a killing, and your brother-in-law (bless his heart and huge brain) made the investment of the century. Chatter is generally skewed. People love to brag about their successes but rarely come forward with their failures. But both matter — successes and failures. After all, the tortoise beat the hare. Phrased a little more eloquently in Proverbs 21:5, “The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty.” Also, there is not one right away to invest. The sooner you come to a conviction on how to do what is best for your unique situation, the better chance of success you will have.
What scoreboard am I watching?
I coach a competitive youth girls’ soccer team. At this stage in their lives, the biggest detriment to their development as soccer players and young ladies is the score. Don’t get me wrong, I want to win, but it’s further down my priority list, and I admit it’s hard to get past that sometimes. The post-game question that everyone wants to know: How did you do? What they mean is, “Did you score more than the other team?” It’s the same with investing: How did you do? Did you make more money than your co-worker? Did you beat the S&P 500?
Instead, we might start asking ourselves: Did I stick to my plan when it mattered most? Am I focused on investing toward my unique objectives? It’s not easy. It’s a different kind of scoreboard, but one far more appropriate and productive.
We can enjoy the Trump rally for now. We may soon see the Trump valley and then the Trump rally again… it’s as markets go. Whether rally or valley, just make sure to ask yourself the right questions…
And that is just one more Principle of Prosperity!
Anthony Saffer, CFP of One Degree Advisors, Inc. coordinates principled financial solutions for families. Learn more at: onedegreeadvisors.com
Advisory services offered through One Degree Advisors, Inc. Securities offered through Securities America, Inc., Member FINRA/SIPC. One Degree Advisors and Securities America are separate companies.
