Trump Won, Now What?
The unimaginable has happened. America has voted the most unlikely candidate for President and a lot of people got caught by surprise.
However, I wasn’t as surprised that Trump won. In fact, I was half expecting it. For all of Trump’s bluster, I already had a feeling he will have a good showing in the polls, maybe a close race with Clinton if Clinton did win. But when it was shown he was leading in the early polls, I knew he was going to win.
What surprised me was that the whole country voted Republican. The US congress and senate is now controlled by the Republicans. Last time, congress was controlled by the Republicans but the senate was controlled by the Democrats. This time around, the Democrats were completely demolished.
Why? Historically, when the economy is doing badly, the incumbent party almost always losses. Why? Because the people wants change, so the kick out the current party and install a new party to see if they can make things better. If the economy is doing well, nobody wants to rock the boat.
So, how can I be sure that Trump would win? Well, there’s an analysis by Strategas Research Partners LLC that the performance of the S&P500 Index has signalled the outcome of every presidential election since 1984. In the three months prior to the vote, if the S&P 500 is up, the incumbent party 86% of the time since 1928.
But, the S&P500 was down 3.6% since August 8 up to one week from the vote. The stock market was basically showing that they don’t want Clinton to win.
Even before that, I had a feeling Trump will have a strong showing in the polls when I went for a road trip to Yellowstone National Park. Our route took us from BC to Washington State, through Oregon, Idaho, Wyoming and Montana.
What I saw as we passed through the small towns from Idaho, Wyoming and Montana was the “Trump – Make America Great Again” banner. However, I never saw one Clinton banner anywhere during the trip. And these small towns is Middle America. The blue-collar, middle-class, small town American who are strong voters. And behold, those States all voted Trump. Washington State and Oregon voted Clinton.
This is even when all the media went against Trump and was basically all for Clinton. So don’t believe everything you hear and read in the media.
Market reaction
The market reaction was totally unexpected as well. Most people were predicting that the stock market will go down when Trump is voted. Well, the S&P Futures market was down the night of the election when Trump was leading. But the next day, the Dow Jones was up over 200 points and it is up over 200 points today.
Why is that? Why did the market react differently from what people predicted?
The main reason is, the stock market doesn’t like uncertainty. Leading up to the election, it was a very close race. Both candidates have very different economic agendas so investors were not sure how to invest. That’s why the market was trending sideways and even down leading up to the election.
If you remember, the stock market bottomed out in mid-February this year and rallied up until mid-April. Then it traded sideways, went down a bit in July then up and sideways again and peaked in mid-August.
However, in the last 3 months before the vote, the market went down 3.6% which, as predicted, made Trump the winner.
But now that the market knows that Trump is going to be the President, investors now know how to position their portfolios to take advantage of his win based on what he promised during his campaign.
From what I hear from portfolio managers, they repositioning their portfolios for his promise of infrastructure funding and deregulation in American industries.
So how should you reposition your portfolio? Two words, “you don’t”. If you’re a long term investor, these short term fluctuations doesn’t bother you. Markets go up, markets go down, but over the long term, the market goes up. If you’re well diversified, you have already positioned your portfolio a long time ago to take advantage of any market situation.
What you should be doing now is getting ready to pounce should the market drop big time. This means, things are a bargain and you should be investing more to take advantage of the sale.
However, I wasn’t as surprised that Trump won. In fact, I was half expecting it. For all of Trump’s bluster, I already had a feeling he will have a good showing in the polls, maybe a close race with Clinton if Clinton did win. But when it was shown he was leading in the early polls, I knew he was going to win.
What surprised me was that the whole country voted Republican. The US congress and senate is now controlled by the Republicans. Last time, congress was controlled by the Republicans but the senate was controlled by the Democrats. This time around, the Democrats were completely demolished.
Why? Historically, when the economy is doing badly, the incumbent party almost always losses. Why? Because the people wants change, so the kick out the current party and install a new party to see if they can make things better. If the economy is doing well, nobody wants to rock the boat.
So, how can I be sure that Trump would win? Well, there’s an analysis by Strategas Research Partners LLC that the performance of the S&P500 Index has signalled the outcome of every presidential election since 1984. In the three months prior to the vote, if the S&P 500 is up, the incumbent party 86% of the time since 1928.
But, the S&P500 was down 3.6% since August 8 up to one week from the vote. The stock market was basically showing that they don’t want Clinton to win.
Even before that, I had a feeling Trump will have a strong showing in the polls when I went for a road trip to Yellowstone National Park. Our route took us from BC to Washington State, through Oregon, Idaho, Wyoming and Montana.
What I saw as we passed through the small towns from Idaho, Wyoming and Montana was the “Trump – Make America Great Again” banner. However, I never saw one Clinton banner anywhere during the trip. And these small towns is Middle America. The blue-collar, middle-class, small town American who are strong voters. And behold, those States all voted Trump. Washington State and Oregon voted Clinton.
This is even when all the media went against Trump and was basically all for Clinton. So don’t believe everything you hear and read in the media.
Market reaction
The market reaction was totally unexpected as well. Most people were predicting that the stock market will go down when Trump is voted. Well, the S&P Futures market was down the night of the election when Trump was leading. But the next day, the Dow Jones was up over 200 points and it is up over 200 points today.
Why is that? Why did the market react differently from what people predicted?
The main reason is, the stock market doesn’t like uncertainty. Leading up to the election, it was a very close race. Both candidates have very different economic agendas so investors were not sure how to invest. That’s why the market was trending sideways and even down leading up to the election.
If you remember, the stock market bottomed out in mid-February this year and rallied up until mid-April. Then it traded sideways, went down a bit in July then up and sideways again and peaked in mid-August.
However, in the last 3 months before the vote, the market went down 3.6% which, as predicted, made Trump the winner.
But now that the market knows that Trump is going to be the President, investors now know how to position their portfolios to take advantage of his win based on what he promised during his campaign.
From what I hear from portfolio managers, they repositioning their portfolios for his promise of infrastructure funding and deregulation in American industries.
So how should you reposition your portfolio? Two words, “you don’t”. If you’re a long term investor, these short term fluctuations doesn’t bother you. Markets go up, markets go down, but over the long term, the market goes up. If you’re well diversified, you have already positioned your portfolio a long time ago to take advantage of any market situation.
What you should be doing now is getting ready to pounce should the market drop big time. This means, things are a bargain and you should be investing more to take advantage of the sale.
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