Response To Presidential Election Results

Life is full of surprises. Last night is certainly an example of that. One thing we know for certain is that markets don’t like surprises.

The consensus over the prior two days was a Clinton victory, which was largely anticipated and factored into market expectations. Clinton offered a continuation of the status quo, a known, predictable and stable direction going forward.

The surprise Trump victory brings with it new and largely unknown changes. Last night, the markets reacted negatively to introduction of unknowns, not unlike another recent injection of uncertainty, BREXIT, where world markets reacted in very similar manner. (As of this writing the markets are up 1%, which is a 180-degree reversal of where the markets were predicted to be today.)

As a reminder, before the BREXIT vote, most analysts believed the status quo would prevail, and the pre-vote markets reflected that assumption. The unanticipated vote in favor of leaving the EU brought the pre-market Dow futures down over 700 points the night of the vote. When markets opened the next morning, the Dow dropped more than a 1,000 points as uncertainty ruled the day, and another 400 points the following day. What happened after that? A 4 day rally that recovered nearly the entire decline.

So now a question on the minds of many: What should I do now? Our advice is the same as after BREXIT: Stay with your strategy and don’t make knee jerk reactions to the noise of the day. At Kaizen, we build portfolios designed to persevere through the ups and downs of life’s surprises and inevitable changes. Having said that, we will continue to digest what a Trump administration will look like and how their policies could impact our country and ultimately our portfolios.

Certainly there are plenty of pundits out there claiming they know what will happen, but the fact of the matter is, no one has a crystal ball with the ability to predict the future with 100% certainty. However, there is one thing that we know for sure: The world’s companies will continue to innovate, adapt, and strive to maximize profits. This is what ultimately drives the markets long-term.

We are a resilient nation, and like all previous changes of leadership, we will adjust and thrive – it’s the American Way.

To your prosperity!