# How should investors respond to Donal Trump’s election victory?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2016-11-11
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Navigating Market Volatility: Tom Elliott, deVere Group’s
Meta Description: Gain insights on how to navigate market volatility and optimize your portfolio in the wake of Trump's policies. Stay informed and make smart investment
URL: https://financedigest.com/how-should-investors-respond-to-donal-trumps-election-victoryhtml

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**Tom Elliott**, deVere Group’s International Investment Strategist.

**Market response**

Gold, Treasuries, the yen and the Swiss Franc have risen thanks to their safe haven status. The S&P 500 futures and many global [stock markets](https://www.financedigest.com/online-trading-and-stock-markets.html "Online Trading and Stock Markets") are down, particularly Asian markets, on fears that a Trump presidency will undo the global trade agreements and so trigger a tit-for-tat rebuilding of tariff walls.

**How to respond?**

We should not overreact. [Market bears](https://www.financedigest.com/protecting-stock-portfolios-in-a-bear-market.html "Protecting Stock Portfolios in a Bear Market") have a terrible track record when they forecast doom and gloom. We should remember 1) U.S third corporate earnings having [come in at generally better than expected](https://www.financedigest.com/global-hid-ballast-market-expected-to-decline-with-a-cagr-of-9-8-in-the-coming-decade.html "Global HID Ballast Market Expected to Decline with a CAGR of -9.8% in the Coming Decade") levels, ending a profits recession. 2) Contrary to Trump’s claim that America needs fixing, its economy is actually quite solid: GDP [growth is running at around](https://www.financedigest.com/uks-kwarteng-mini-budget-was-essential-in-resetting-debate-around-growth.html "UK’s Kwarteng: Mini budget was essential in resetting debate around growth") 2.9%, and unemployment is low with wages now rising. This will help support corporate earnings looking ahead. 3) Because of demographic factors in the U.S and the west in general that reduces demand for capital, and a glut of global savings caused by [current account](https://www.financedigest.com/coffee-current-accounts-and-the-commoditisation-conundrum.html "Coffee, current accounts and the commoditisation conundrum") surpluses in Asia and north Europe that has generated too much capital, U.S and global [interest rates](https://www.financedigest.com/czech-interest-rates-already-at-high-level-central-bank-governor-says.html "Czech interest rates already at high level, central bank governor says") and bond yields are likely to continue to be low for years ahead. Which supports current stock [market valuations](https://www.financedigest.com/emission-control-catalyst-market-is-projected-to-rise-at-above-10-cagr-surpassing-the-market-valuation-of-us-20-06-bn-during-the-forecast-period-2021-2031.html "Emission Control Catalyst Market is projected to rise at above 10% CAGR, surpassing the market valuation of US$ 20.06 Bn during the forecast period 2021-2031").

**Asset allocation**

Long term [investors are unlikely to benefit from taking short-term trading bets](https://www.financedigest.com/ladbrokes-owner-shares-hit-record-high-as-investors-bet-on-new-mgm-bid.html "Ladbrokes owner shares hit record high as investors bet on new MGM bid") over the coming weeks. There is a significant risk that selling equities now will result in being out of the [market](https://www.financedigest.com/athletic-footwear-market-is-expected-to-generate-a-revenue-of-usd-193-3-billion-by-2031-globally-at-4-88-cagr-verified-market-research.html) when a [recovery rally](https://www.financedigest.com/european-shares-rally-as-china-stimulus-lifts-recovery-hopes.html "European shares rally as China stimulus lifts recovery hopes") kicks in. Certain sectors look like they may outperform as health, environment, and bank regulations are changed (see above), and [emerging markets](https://www.financedigest.com/britain-launches-plan-to-boost-green-investments-in-emerging-markets.html "Britain launches plan to boost green investments in emerging markets") may under-perform on fear of a reversal of globalisation. Investors should instead maintain a broadly diversified portfolio, [buying into funds that can themselves utilise professional fund managers](https://www.financedigest.com/looking-to-buy-a-rental-property-heres-why-you-need-a-property-manager.html "Looking to Buy a Rental Property? Here’s Why You Need a Property Manager") with their armies of analysts to take advantage of any sector moves.

**Trump’s policies**

Cynics say Trump will carry out the objectives of [Republican](https://www.financedigest.com/republican-red-wave-fizzles-but-midterm-race-for-u-s-congress-tight.html) donors, [cut taxes](https://www.financedigest.com/uks-sunak-under-fire-over-cost-of-living-defends-his-tax-cut-plans.html "UK’s Sunak, under fire over cost of living, defends his tax cut plans") and end Obamacare. Indeed, we can probably [say goodbye to Obamacare and Democrat efforts to contain healthcare costs](https://www.financedigest.com/caixabank-proposes-sector-wide-freeze-in-variable-mortgage-costs-source-says.html "Caixabank proposes sector-wide freeze in variable mortgage costs, source says") (so Trump is good for pharma stocks). We can also [expect a lighter touch environmental regulation given Trump’s scepticism over the causes of global](https://www.financedigest.com/citi-expects-global-equities-to-rally-18-by-end-2023.html "Citi expects global equities to rally 18% by end-2023") warming (good for energy stocks). And there will be Republicans itching to at least partially repeal of the Dodd-Frank legislation (good for finance sector shares who can put more risk on their [balance sheets)](https://www.financedigest.com/ecbs-villeroy-lays-out-plan-for-shrinking-balance-sheet.html "ECB’s Villeroy lays out plan for shrinking balance sheet"). This is all mainstream [Republican](https://www.financedigest.com/republican-red-wave-fizzles-but-midterm-race-for-u-s-congress-tight.html) thinking about what constitutes good policy.

[Tax cuts on business](https://www.financedigest.com/what-you-need-to-know-about-tax-savings-for-businesses-in-las-vegas-nv.html "What You Need to Know About Tax Savings for Businesses in Las Vegas NV") are likely, as is greater military spending. However Trump hopes to do a very un-Republican thing and [tax the profits of American companies](https://www.financedigest.com/italys-windfall-tax-on-energy-companies-needs-to-be-rewritten-pm.html "Italy’s windfall tax on energy companies needs to be rewritten – PM") that are kept overseas. In all, a mild Keynsian stimulus to the [economy can be expected](https://www.financedigest.com/global-fuel-injector-cleaner-market-emerging-economies-expected-to-influence-growth-until-2031.html "Global Fuel Injector Cleaner Market: Emerging Economies Expected to Influence Growth until 2031").

**Republicans versus Trump**

There are other Trump ideas that run counter to traditional [Republican](https://www.financedigest.com/republican-red-wave-fizzles-but-midterm-race-for-u-s-congress-tight.html) thinking, particular his attacks on globalisation, immigration, and political isolationism. Republican leaders like immigration, it [keeps labour costs](https://www.financedigest.com/cost-of-living-crisis-consumers-keep-spending-for-now.html "Cost of living crisis? Consumers keep spending for now") down, brings in skilled foreigners, and -to many- is at the heart of what America keeps the American economy vibrant. They like free trade with Mexico, China membership of the WTO, and believe in [America’s duty to defend itself and its allies from regional](https://www.financedigest.com/why-are-content-moderation-solutions-skyrocketing-in-the-americas-region.html "Why are Content Moderation Solutions Skyrocketing in the Americas Region") bullies, through military alliances in Asia and through NATO.

The [Republicans control](https://www.financedigest.com/analysis-u-s-regulators-could-be-pressured-by-slim-republican-house-control.html "Analysis-U.S. regulators could be pressured by slim Republican House control") the Senate and the House. They will now try to capture Donald Trump and shape him into a mainstream Republican. This may be hard – he resisted capture during the primaries, and indeed has been disowned by several senior Republicans. True, he can now claim a popular mandate for some very un-Republican views on trade and building real, and tariff walls, against trading partners, but presidents need Congress to get things done. Stalemate may ensue on these policies.


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