Leading up to the election, conventional wisdom predicted a Trump victory would immediately ignite short-term market chaos. To quote Bill Murray in Ghostbusters, everyone was ready for “dogs and cats living together – mass hysteria!”
As returns came in, futures plunged. But suddenly, after the smoke cleared, investors had visions of deregulation and deficit spending dancing in their heads, driving the indices to record high after record high.
How should this all be interpreted? Well, as a believer in prudence, my answer is nearly always “cautiously.” Concerns about overvalued securities haven’t gone away, and there is a brave new world of interest rate and inflation risk (just look at the bloodbath in bond markets), as well as political risk where the maxim must be “we don’t know what we don’t know.”
Many commentators say the deficit will eventually turn into a beast, but there are different perspectives on this. At the same time, a business-friendly government is indeed a boon.
The fundamentals are the same even as the circumstances evolve. As always, it comes down to the individual investor’s particular tolerances and needs. In the words of the recently departed Leonard Cohen, “there’s a crack in everything” — even the market.
Written by Jeffrey Hackney
Investment advisory services offered through AE Wealth Management, LLC.
Investing involves risk including the potential loss of principal.
This article is for informational purposes only and is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.