The Election Aftermath — What Does It Mean For Your Wallet?

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November was certainly an interesting month. While the election results were surprising to some, it is important to keep things in perspective and not let the results negatively impact your portfolio. The most important thing to do is not panic. This should be the first lesson in investing and retirement saving. Planning for retirement is long-term in nature, and a properly built retirement plan is not going to be taken off-track based upon who is elected president and who isn’t.

In 1949, Benjamin Graham wrote a book called “The Intelligent Investor,” and Warren Buffett attributes a lot of his success to that book. In it, he describes Mr. Market. Mr. Market is there to serve you and not instruct you. That might be the most important line in investment history. If you look back prior to the election, people were saying that if Mr. Trump were to win, the market was going to crash 10 to 20 percent. They said, “If Mr. Trump wins, it is going to set off a global recession.” That sounds like Mr. Market instructing us, doesn’t it?

Goldman Sachs conducted a study that reviewed historical elections and how they impacted the market. The results were stunning. They found that presidential elections have just as much an impact on the market as chance. In other words, they had no impact at all. Leading up to this election, if you asked anyone in America, they would have told you that this election was different. This election was going to make all the difference in the world depending upon who won. What have we seen since? I think most of us already know the answer to that.

The moral of the story is that there will always be the next “something.” A properly built financial plan can withstand any challenges ahead. A properly built financial plan isn’t going get negatively impacted by a change in president. Certainly, we are going to see parts of the economy grow under President Trump and we are going to see parts of the economy struggle under President Trump. That would have also been the case with Hillary Clinton winning. We are going to see ups with President Trump and we are going to see downs with President Trump. That would have been the same with Hillary Clinton. The most important factor in all of this is your time horizon, risk tolerance and goals. It always goes back to the basics.

People should have a portion of their portfolio allocated to money that pays a guaranteed interest rate or has a no-loss feature. Second, invest a portion of your money that is market-based and has a market component to it, meaning that it has some level of risk to the investment. The amount allocated to each of these areas differs with each person and portfolio. A qualified investment planner can help determine your portfolio and percentages to invest in each area, and understand your risk tolerance and other factors. Investment diversification is the key to a successful investment strategy.

The real impact of President Trump on our nation and our economy remains to be seen. If the election taught us anything, it’s that we never know what is going to happen. I have followed sports my entire life, and Chris Berman of ESPN has a saying every time a team plays another team that they are supposed to beat. He says, “That’s why they play the game!” We talk about who is going to win and what impact that win is going to have. So called “experts” predicted Hillary Clinton was going to win in a landslide, and in the end, she didn’t. We don’t have any idea what the future holds. All we can do is establish a list of criteria that we are going to use when evaluating a circumstance or, in this case, an investment. Call it a credo, a mission statement, a creed, an axiom or a set of tenets. Call it what you wish, but in the end, the idea is to build a properly built investment portfolio that isn’t going to be impacted dramatically simply by one event.

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