With the election now in books, it’s important to reiterate SigFig’s view about managing your portfolio in an uncertain future. For many people, investing for the future is a very long-term endeavor, with most people living through 10-to-12 Presidential elections over the course of their careers. In the grand picture, last night’s events represent a single moment in a long lifetime.
At the same time, markets tend to disfavor uncertainty. Most projections had Clinton winning the election and with a Trump victory, stock market volatility is likely to increase, as the election’s unpredictability is weighed and priced in. Nonetheless, we encourage our clients to stay the course.
In practical terms, holding a diversified portfolio insulates our clients from some of the medium and longer term impact of an unexpected result. This is because there are likely certain industries, companies, and countries which will do better under a Trump Administration than they might have with Clinton in the White House. Furthermore, though Trump could act quickly to undo some of the Obama Administration’s economic agenda, significant changes in direction would would require the cooperation of Congress and the Courts.
On the whole, the future may become more challenging for investors, yet a diversified portfolio remains the most appropriate long-term approach to managing your investments.
Terry Banet is SigFig’s Chief Investment Officer. With over 25 years of investment experience, Terry has held senior investment management and private banking positions at JPMorgan and USTrust.