Anxious investors seek reassurance over Trump presidency
That was the primary emotion many investors felt in the lead-up to the presidential election. If Donald Trump were to win, they worried, could his victory — and the unknown it represents — be harmful to their investments and retirement accounts?
Now that a Trump presidency is a reality, a fear of immediate negative consequences has largely dissolved, driven by a stock market that shrugged off initial overseas concerns and rallied, rather than retreated. In its place is a lower-grade anxiety about what lies ahead.
Financial advisers spent Wednesday simultaneously monitoring the election’s impact on stock markets, fielding some client distress calls, and repeating time-honored advice: when it comes to investing, focus on the long term.
“Clients are concerned,” said Brad McMillan, chief investment officer at Commonwealth Financial Network, an independent broker/dealer in Waltham. “There’s a sense among people that this could be consequential for their portfolios, and all they really want is reassurance that this isn’t the end, and it’s not.”
It’s not, he and other advisers said, because while financial markets did experience upheaval immediately after Trump’s victory -- with US stocks dropping 5 percent overnight and then rising as much as 1 percent by mid-day -- market performance is typically driven by economic factors like interest rates and corporate earnings, not one-time political events.
Noting that a negative market reaction was predicted if Trump won, McMillan called yesterday’s stock gyrations “perfectly normal volatility” and said he wasn’t aware of any of his firm’s clients cashing entirely out of stocks.
Of about a half-dozen financial advisers contacted by the Globe, none said they had clients in a post-election panic over their portfolios.
Matthew Peck, a founding partner of Plymouth financial planning firm SHP Financial, said he had heard from clients offering “plenty of reactions on the direction of the country, but so far not a single distress call.”
Bob Rice, a partner at Harvest Wealth Management in Needham, emailed his clients Wednesday morning to let them know he was available to offer advice. Responses, he said, ranged from one client jokingly asking, “Can you come over with some chocolate and a basket of opioids?” to another remarking that “the President matters, but there are enough checks and balances to make sure one person does not send it off the rails.”
The big question now for investors is how a Trump administration’s policies, many of which lack detail, could affect the economy, possibly causing a ripple effect on their investments. For instance, if Trump were to follow through on his threats to eliminate NAFTA and impose import tariffs on China, that could trigger an economic earthquake.
But any change in investment guidance to clients would be based “not on the results of the election, but because the fundamentals of the economy could change based on those policies,” McMillan said.
According to Fidelity Investments spokeswoman Deborah Pont, client call volumes were heavier than normal Wednesday morning, but “most clients aren’t panicking and instead are seeking guidance and reassurance and staying the course with their plans.”
As the election approached, she noted, more Fidelity clients were selling stocks than buying them, yet on Wednesday morning buying was outpacing selling — a sign that many investors see Trump’s victory as a financial opportunity.
Indeed, many investors are seeking advice on which business sectors could benefit from a Trump victory and are making investment decisions accordingly.
Based on Trump’s campaign promises, his win is generally viewed as a boon for the pharmaceutical industry, for example, which will likely be under less pressure to curb drug costs. A Trump presidency is also expected to be positive for dirty-energy industries like coal, and less so for clean-energy sectors like solar power.
“Whenever you’ve got some kind of news event like an election, you’ve got people looking at opportunities to step in and buy something at a discount, and we’re seeing that now,” said John Sweeney, Fidelity’s executive vice president of retirement and investing strategies. “So any anxiety has been met with people stepping in and purchasing things that might have been depressed.”
“In the long-term this is likely to be a blip,” added McMillan. “We’ve had consequential elections before. We have a robust political system. It’s unlikely there’s going to be significant disruption…and even if there is disruption, the country has been through tough times before and we’ll be just fine at the end of the day.”