A Message On Post-Election Uncertainty
Michael Conway discusses how investors should manage the market and economic uncertainty of the new presidency.
Hello everyone. After months of polls that all but proved a Clinton presidency, many Americans awoke in shock on November 9th as America began to come to terms with the unlikeliest of president-elects. Investors were left with a multi-trillion dollar question: What does a Trump presidency mean for the economy and markets?
In post election shock, everyone scrambled to their computers to try to figure out what it all might mean. The day after the election, Google searches of “Donald Trump stock market” skyrocketed. In moments of uncertainty, people seek comfort by looking to the experts, but the concept of expertise can get fuzzy, particularly in financial world where certainties don’t always exist. We’re skeptics or fortune-tellers, yet loyalists to the crystal ball of supposed market gurus. Experts follow trends, but experts watching trends didn’t foresee outliers like the 2008 crisis, or that Brexit would happen, or that a reality TV star would become the 45th president of the United States.
Meanwhile, market predictors often contradict one another. Watch CNBC and you’ll realize that you’re watching experts suggest totally different market outcomes, all while they look at the same information. Some say Trump’s policies are great for business. Others think they could upend the economy. We keep watching, waiting for the loudest voice to magically provide the clear answer. But long term investors need to recognize that the answer is for the most part irrelevant. Fear and uncertainty forces the hand of investors in the form of irrational investment behaviors, and while people inherently want to react to surprises, investing for the long term is about accepting outliers and riding above the noise.
No matter what the experts say, remember the inevitability of uncertainty. As 20016 has proven, we cannot predict what will happen or when or how events will ultimately affect the economy. We can only predict the ugly consequences of bad investment decisions. We of course hope for the best for markets and for our country in this unique time, but in the meantime, investors should put down those iPads, turn off CNBC, and focus on long term planning, their life’s passions, and what truly makes them happy.
Happy Thanksgiving, everyone.