Donald Trump has been elected as the 45th president of the United States, based on nearly final results announced by US television networks early Wednesday morning. It will take time before the world has a clearer picture of how he plans to steer the government, and what will be the short and long-term impact on the US economy and markets. During this period of uncertainty, we think it’s important for investors to take a wider perspective on what drives markets and securities.
1. GET READY TO PUT UP WITH SHORT-TERM VOLATILITY.
Elections happen on a regular basis, and investors typically endure fits of volatility in the run-up as markets digest the possible implications.
2. DON’T OVERLOOK THE REALLY BIG MARKET DRIVERS.
Stories about candidates and policy proposals seem to dominate the media cycle, but there are much bigger influences on stock and bond markets: government finances, central bank policies, oil prices and currency changes are among them.
3. POLICYMAKING ISN’T JUST ABOUT THE PRESIDENCY.
Sure, Trump is the big headline. But the battle for Congress is just as important, and at least one Supreme Court seat will be impacted. These moving parts—and the design of government—make it very hard to handicap policy outcomes right now.
4. ULTIMATELY, OPPORTUNITIES ARE ABOUT FUNDAMENTALS.
Policy decisions could eventually have some effect on opportunities—health care is one obvious example. But policy creation takes a while…and major change isn’t guaranteed. We believe fundamentals ultimately drive investment performance.
5. DON’T GET LOST IN THE BALLOTS—FOCUS ON THE LONG TERM.
In the post-beta-trade era, market returns are likely to be lower. The focus should be on enhancing performance with high-conviction insights and active positioning. It will be some time before the real implications of political change—or lack of it—become clear.
Securities are offered through HighTower Securities, LLC, member FINRA/SIPC/MSRB. HighTower Advisors, LLC is a SEC registered investment adviser.
The information contained here reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This document is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor’s personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by AllianceBernstein L.P. or its affiliates.