"The Donald" is in. What's That Mean for You?
If Donald Trump’s election victory teaches us anything, it reminds us that there’s nothing less secure than a “sure thing.”
Just ask Hillary Clinton.
But now investors are asking themselves, “How will a Trump presidency impact my portfolio?”
The immediate answer, even before Hillary had made her concession phone call to "The Donald", was pretty scary: Dow futures dropped more than 800 points in the course of an hour or so.
And three days later, the market is at record highs.
What will next year look like?
The reality is that Donald Trump is a disruptive force in the political and economic landscape. But that’s not necessarily a bad thing all the time.
America needs more manufacturing jobs. Right now. To make that happen, he’s promised to:
- lower taxes
- reduce regulation
- renegotiate trade agreements
All of these will help to stimulate the business and manufacturing sector as well as incentivize the return of some jobs that have gone abroad.
There is a downside, however.
The American economy, especially the stock market, is addicted to the status quo.
Disrupting the status quo always has consequences. Some will be good, others won’t be.
For example, renegotiating trade agreements may result in negative responses from some of our trading partners. American manufacturers may face tariffs abroad. That would negatively impact our manufacturing sector and the buoyant stock market.
Also, near-zero interest rates and loose money “stimulus” policies that the Federal Reserve has followed the past eight years is likely to change. Every time there’s a whisper of an interest rate hike, the market has threatened to crater. The reality is that interest rates must go up, and they'll likely rise at some point during the Trump Administration.
These events alone will result in disruptions in the economy and the market. Uncertainty will rise and investor confidence will likely fall.
What should smart investors do to counter these possible, if not probable events?
Just do what Donald Trump's good friend and Best-Selling Co-Author Robert Kiyosaki has always advised me to do:
- Invest in tangible, useful assets that provide income streams, tax advantages and handsome profits
- Create and shelter your wealth by acquiring under valued assets at discount prices
- Protect your portfolio by repositioning some of it in non-correlated assets
- Take control of your wealth rather than relying on forces you have no control over
In other words, get yourself into more "deal flow" and invest in real assets like real estate.