What Should Investors Know Following the Election?
November 15, 2016 by Staff
Filed under Money/Business, Politics, Tech/Internet, Weekly Columns
(Akiit.com) Once news of the surprising election results recently broke, many investors were wondering what their next moves should be. A lot of analysts and financial experts were predicting a big slump in stocks after the election of Donald Trump but were surprised that following a brief decline they actually rebounded.
There are undoubtedly differences in a Republican administration versus what we saw under the eight years of Barack Obama, which may require shifts in investment strategies. This is compounded by the relative uncertainty that comes with a Donald Trump presidency, as he was considered the outsider in the race.
While no one can predict what the future holds for the markets, the following are some things to keep in mind along with the news of the recently announced President-Elect.
Consider Your Sectors
Most investment professionals don’t recommend investors entirely change their approach or trajectory based on an event such as the election of a new president, but certain sectors are more likely to fare well under the new president.
This could include the financial, energy and pharmaceutical markets.
At the same time, there are sectors such as healthcare and solar power that might not perform as well, although of course, only time will tell.
Watch for New Opportunities
According to Firmex in the Mid-Market M&A Report entitled “Riding Out the Downturn,” the mergers and acquisitions market hasn’t been thriving recently. The level of big deals has been on the decline, but that could change in the future, particularly if business taxes are reduced, and more companies want to do business in the U.S.
Other news that could impact new opportunities presented by mergers and acquisitions could result from a loosening regulatory environment.
Investors will need to keep their eyes on current events and breaking news to spot these potential opportunities that could be great in terms of investing.
Be Cautious with Emerging Markets
Just a few years ago investing in emerging markets was the investment strategy to engage in, but with a new administration in the White House, it could be wise to exercise some caution here.
Investing in emerging markets has never been particularly easy, as investing in countries like China or Mexico may present significant opportunities, but also dramatic swings. With that being said, it will take some time to see how President-Elect Trump handles trade and globalization.
There was quite a bit of talk on the campaign trail about the importance of moving toward a more U.S-centric manufacturing and trade approach, and also some speculation there could be a pull-back from existing trade deals.
All of these elements mean investors might want to wait a while before diving too heavily into emerging markets, at least until there’s a clearer idea of how the election will affect global trends and markets.
Stay the General Course
As a final note, while your portfolio or strategy might require a few tweaks here and there, ultimately the best advice is to stay the course with your investments. It’s never wise to make colossal moves based on single events, particularly when you’re looking at the long-term outlook.
Staff Writer; William Shaw