Its December 1st, 2016 and the U.S. stock markets are right near all time highs. We’ve had the craziness of the Trump election which initially pushed stocks down around the world until investors quickly reversed their thinking and decided that Trump would be good for business rather than bad. What is an investor to do now?
Unfortunately, just like the election that showed how split the United States is, there is a big split in what the “experts” are predicting for the stock market as well. Searching the Internet you can find opinions that aren’t just differing slightly but ones that are completely opposite.
This guy gives 4 reasons why the economy will do great under Trump and is probably the closest to what investors are thinking as they take the market to new highs. But then this guy (who is obviously a liberal Democrat) says the economy is going to tank.
Usually the truth is somewhere in the middle of two opinions that are so opposite and that is probably what will be the case this time as well. Will stocks crater specifically because of Trump’s new policies? That’s doubtful. Will stocks soar in 2017 and beyond specifically because Trump is generally pro business? That’s doubtful as well.
We have a connected world more than ever right now and what will happen in specific locals (Italy, Greece, China, etc.) is unknown and can affect our markets greatly. Yes, Trump can and will make moves that will prove to help or hurt things but the United States isn’t alone in the world anymore. It is the biggest and most influential player but there are so many moving pieces that the market could tank on all sorts of news that has nothing to due with Trump. Likewise, we could have a steady market continue in an uptrend as world problems get worked out, with no influence from Trump.
There have been a lot of knee jerk reactions after the U.S. election and the news continues to be filled with them daily. But when you make knee jerk stock decisions, that is often the wrong thing to do. So stay calm, keep some money on the sidelines, and continue to buy companies that you think have bright futures ahead of them. That is the smartest way to play the stock market.