Smart Investing Versus Following The Media

Nov 22, 2016 | Blog, Investing

Without a doubt, this last month has been full of surprises with the presidential election, and not just politically. Just as most political pundits predicted a Hillary Clinton victory, a swath of economic commentators said that a surprise Donald Trump win would cause the stock market to plummet.

Politics aside, these recent events serve as an excellent lesson on how to maintain smart investing strategies during times of uncertainty and panic. Here are some points to keep in mind:

Stay the course

It turns out, the market did initially plummet after Donald Trump was victorious—the Dow Jones Industrial Index fell more than 700 points overnight. However, by the next morning, a majority of its losses were recovered. Even more importantly, many major US stock market indexes (such as the Dow and the S&P 500) reached an all-time high recently.

The takeaway here is that the best course of action is often to stay the course. Those who sold their investments at a low during the initial panic would’ve been sorely disappointed, to say the least, when their investment went on to rise in value shortly after.

No financial prediction is certain

Before Trump’s victory, many reputable sources claimed that the stock market was certain to drop 10 percent if he won. This goes to show that smart investing involves following data and rationality, not prediction. No financial prediction about market movements is certain, no matter how convincing the source is.

Learn more about smart investing

At LexION Capital, we remove emotions from the equation, and carefully invest your wealth with a bespoke, facts-based investment plan. We take a data-driven and analytical approach that’s firmly grounded in academic research to help you achieve your financial goals. If you’d like to learn more about our approach to smart investing, reach out to start a conversation today.

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