How You Can Invest During the Trump Presidency

If there’s one thing certain about President Trump, it’s his pro-business perspective. His focus is on boosting business and stimulating growth through measures like job creation, reduced regulation, and tax reform. From this standpoint, there’s a strong probability that equities will continue to prosper, giving reason for investors to hold meaningful stock market exposure.

However, before you become overly exuberant, it’s important to remember that no president can single-handedly implement policy objectives. In the last 100 days, we’ve already witnessed how political challenges can impact the markets (e.g., the early defeat of the replacement healthcare bill caused markets to briefly retreat as the Trump agenda was called into question).

The markets have since hit new highs with a renewed era of business optimism. Ultimately, we expect a strong pro-business environment to emerge and sustain for a period of time, while remaining mindful that outcomes are not certain, nor is the journey we will follow in the markets along the way.

Prior to President Trump’s election, there were numerous predictions of which sectors would flourish and which would suffer. While some were accurately predicted, such as health care and consumer discretionary spending, we find the most interesting point of note is many were not.

For example, energy was expected to rally, given more lenient environmental policies and more aggressive business interests, but energy investments have languished. Likewise, financials were expected to do well in a looser regulatory environment, and did immediately following the election, but have since been largely lackluster during the initial months of 2017.

Beyond sector bets, inflation was expected to emerge in a stimulatory environment. Similar to the financial sector, we saw an immediate upswing in interest rates, but they have since declined, which is counterintuitive to a potentially inflationary era

The investment markets have been generally upbeat, with only one notable pullback since President Trump’s election. This is positive news, especially if your portfolio generally favors equities. However, it’s important to be forewarned that volatility could ensue for a variety of reasons.

President Trump’s impetuous nature and lack of political experience are certainly worthy of consideration. We seem poised to enter an era of political posturing, debates and standoffs, both domestically and abroad. Any one of these events has the potential to result in a market backlash.

Perhaps what’s most notable is the fact our current bull market recently celebrated its eighth birthday. This is impressive in the history of bull markets, but also foreboding, as no bull market lasts forever. This factor, combined with fairly lofty stock price valuations and the potential volatility of Trump’s presidency, all bring our optimism back to reality, remembering the core principles of investing.

Source: Bloomberg
Trader I. Ivanov

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