Life is full of surprises, and Donald Trump’s unexpected election victory is certainly no exception. Politics aside, you may be wondering how an event like this should affect your investing decisions. After all, many investors tie their emotions to their investment choices. In periods of great uncertainty, our gut instinct to react in investing is stronger than ever.
With that in mind, we’ve composed some focal points about how you should react:
Keep history in mind
It shouldn’t come as a surprise that the market reacted with increased volatility after the largely unexpected election results. Increased volatility is par for the course during times of uncertainty. However, history also tells another story about the market in the long-term. Despite any political event or president in office, the market has always returned to normalcy, and gone to reach new, record-breaking highs.
Wise investors always keep data and history in mind before making short-term decisions, and you should as well to become a more successful investor.
Remember, the president doesn’t act in a vacuum
Although the election seems to be the only thing covered in the media, the truth is that the president isn’t the only person who affects the economy or politics. In a country of checks and balances, the president is fairly limited in power.
Moreover, the stock market is affected by a myriad of factors. Corporate earnings, for instance, are unlikely to change because of a different president in office.
Wise investors avoid market timing
Wise investors know that short term reactivity and attempts to time the market often result in the opposite of investing success. Although it might seem counter-intuitive, your best course of action is to take no action if you’re in a well-diversified long-term investment solution.
Learn more about rational investing
At LexION Capital, we remove emotions from the equation, and carefully invest your wealth with a bespoke, long-term investment plan. With our clients, we take a data-driven, long-term approach that’s firmly grounded in academic research. If you’d like to learn more about this approach, and how we can help you reach your financial goals, don’t hesitate to contact us today.