Nov 10: Letter to Investment Clients - Stock Market after the 2016 U.S. Election
Not as a political organization but rather an investment and financial planning organization, we interpret the events that play out on the political stage and translate those events into the reality of what changes might come to the business climate going forward. When we invest money into companies, we are looking at companies that provide a service or a product that consumers will use on a day to day basis. Examples are the utility companies that provide our electricity. Gas companies that bring the fuel to our homes for heating and cooking, etc. Pipeline companies that transport the gasoline that we use to power our vehicles. Food and beverage companies that provides the nourishment we need on our grocery store shelves. Real estate investment companies that own apartment buildings to provide homes for people who rent. Communication companies that we buy our cell phone services from. Cosmetic companies, defense companies, and the list goes on and on.
As an investment advisory firm, we look at the new political landscape and try to digest where we are going in the near term as well as the long term when considering which companies we need to exit/enter as the tides change. If we look back, it wasn’t too many years ago when we went months without hearing about a political party or politician as they were elected and went to serve their office position for the people who elected them. Then as time passes, the next election cycle would come and we’re told what they did or didn’t do and we’re asked to make our choices again. This is the political system that we know and familiarize ourselves with. But in today’s world of 24/7 political radio and television coverage and with all the people who watch and listen and talk and message about the political process with how great their elected official is and then they get caught up in the rhetoric and their very happiness is dependent upon their side winning.
As I watched into the wee hours of the morning I realized with certainty that we elected a new President that seemed almost impossible several months ago. My first thought was that the markets would drop significantly yesterday and the futures gave the appearance that it was going to be a big down day (I was caught up in the media predicting something based on their bias rather than the facts, and how could anyone have known what the market would do regardless of the winner?). The last week or so I began pruning positions in anticipation of a close election and the uncertainty of what a win by either candidate would do to the market and your money. I now see the benefits of this move as we locked in gains and kept our powder dry for new opportunities for tomorrow.
Now that the country has decided our political future for the next four years, I ask myself what does this mean to our investing future? Will we use less electricity or less gasoline? Will we buy fewer groceries? The answer is probably no. Will the sun come up tomorrow and people go to work and eat and sleep etc.? The answer is probably yes.
To conclude, we will look towards the future, buying or adding to good companies when the price is right, taking profits when we can, cutting losses when necessary and growing the portfolios with the opportunities we are given.
And to the Clinton supporters, it is my advice to realize life will be okay. For the Trump supporters, it is my advice to realize that politicians are not the answer to all of life’s problems as we still need to get up go to work and take care of ourselves.
I look forward to the opportunities that lie ahead and relish the opportunity to figure out where we put our money to work for our families and our future growth moving forward.