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Investment portfolio - Presidential election

Trump’s victory and your investment portfolio

November 9, 2016 11:13 am Published by

One of the most bitter and divisive presidential campaigns in US election history is finally over. What does this mean for your investment portfolio?

Donald Trump has been elected President of the United States, and this can only be described as a somewhat astonishing victory for a celebrity businessman and political novice.

In an extremely narrow sense, perhaps we should not be that surprised by the outcome, since polling — to a greater extent than the conventional wisdom acknowledged — had shown a fairly competitive race with critical weaknesses for Clinton in the Electoral College. But in a broader sense? It’s one of the most shocking political developments of our lifetimes.

This election was, as some commentators have argued, a ‘rebellion of the working class’ against the political elite of both Democrat and Republican parties.  It appears that Trump was able to mobilize and turnout his base of non-college educated working class (combined with the traditional conservative rural, small town, small business base) more effectively than Hillary Clinton was able to turn out her base of suburbanites, minorities, college educated, and women.

Public opinion polls and new media outlets totally mis-forecast the US election, as they did with the UK Brexit referendum vote last June. They typically predicted a 3-5% vote in favour of Clinton. The popular vote was in favour of Trump.

So how might Trump’s win affect your investment portfolio?

Of course, this will just be the beginning, as Trump begins to enact his policies and global participants unpick what they mean for the markets at large. It will obviously take years to assess the real impact of any president’s administration, but there are historical precedents we might like to use as indicators.

Studies have shown that between 1929 and 2011, the US stock market gained more under Democratic than Republican presidents. Whether this proves to be true on this occasion remains to be seen, but it’s no surprise that all eyes are currently on the Dow and S&P 500 (key US markets)

At Hartsfield, despite having an allocation to the US in all core portfolios, in the short-term we do not anticipate making any substantial changes to our portfolios on the basis of today’s result. As we did in June we will continue to carefully monitor our portfolios during the inevitable volatility whilst we wait for the dust to settle.

If you would like to talk to the Hartsfield team about your investments, please get in touch

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This post was written by Paul Verwoert

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