How to position your portfolio under the new President

Donald Trump winning the US election has been another blow for the pollsters and the bookmakers. For now we all deal with the reality that he is the next President of the United States and the media circus that goes with that.

My colleagues and I, like you, are investors and share clients current concerns about key geo-political events and the potential impact they have moving forward. To provide an element of comfort, we do meet with many investment managers, to try to understand (as best as we can) the potential volatility these key events, to understand the reaction of the markets, at any given time.

The consensus from the recent US election result is that we sit in a ‘wait and see mode’. Investors are keen to weigh Trump’s campaign promises and establish any likelihood whether they will get enacted, in what form, timing and more importantly the consequences!

Our message, to clients, throughout this year is that key events such as the Referendum (to leave the EU) along with the more recent US Election result are events that markets have to navigate their way through. At the time, they of course dominate your thinking but at the same time it is important to reaffirm the following to you:

Markets go up, down and sometimes stay the same. The short term ‘movement’ and volatility in markets can be unpredictable. CBW aims to work with our investment partners to put together a well-crafted, globally diversified lifetime investment portfolios for our clients. This strategy ensures that assets are spread geographically containing thousands of individual securities (stocks, bonds), to weather all market storms and absorb the latest panics which may be thrown at it.

Importantly, you are not investing for a day, a week, even a month or a year. Possibly you may be invested for ten years or more, even the rest of your lifetime. History has shown us that markets fall and recover, but that over the long-term sharp short term rises and falls average out to produce strong long-term results. These events (in the overall scheme of things) have little impact on a 20, 30 or 40 year investment plan.

Naturally, you should be prepared for a lot of noise and panic predictions from the financial media following these key events. It is in their interests to do all they can to cloud thinking, in an attempt that you change things.

Be selfish and remain focussed on the financial plan and long term objectives for you and your family. Always bear in mind what your objective are while you remain invested. When we complete and review financial plans for our clients, we always use conservative estimates. This way the Plan has an in-built assumption that difficult investment conditions will occur from time to time.

For clients that identify a point in the near term where they require income or a capital withdrawal, we have allocated funds to cash or other low-risk investments to help protect the value of funds designated to be spent at a given time.

Financial Planners are there to be rational for clients during irrational times. Our continued advice to clients is to do their level best to block out this noise and speak to us about any concerns that you may have moving forward. We are confident that we can put your mind at rest with some sound financial and investment thinking to ensure both you and your family remain on the right path referring back to the financial plan.

Further information

If you have any questions regarding this article or another matter regarding financial planning, please don’t hesitate to contact our financial planning team or the author as below.

About the Author

Graham Foster

Partner & Director of CBW Financial Planning +44 (0)20 7309 3855