Trump just pulled off arguably the biggest deal in history.
And in so doing, it’s clear that the British song of nationalism has just come crashing over to American shores.
What to expect from the market in the next few days
We’re already seeing futures down 750 points in after hours. And the peso is crashing.
The market needs time to process what this all might mean and render a collective verdict.
In the short term that means fear & declines.
Ultimately though, like how Brexit played out in June, I think things will turn out mostly just fine, and the market will again rally higher, buoyed by a lower chance of an interest rate hike in December, and proving this time period to be just another nice fire sale.
So think of the next few days as essentially our version of Brexit. But more potential to the downside.
So here’s the deal
The market is going to be fine in the long term. And maybe even in the short-medium term.
Many of Trump’s policies are extremely friendly to business and the economy.
Like getting rid of Obamacare and reducing corporate taxes.
In the long term, this should have a stimulative effect on the economy.
What people are freaking out about are the impacts of policies like:
- Retributive tariffs against currency manipulators (ie. a 45% tariff against China for currency manipulation)
- Retributive tariffs against companies that move jobs out of the country (ie. a 20% tariff on Ford until they move their jobs back in the country)
- Ripping up NAFTA and of course not signing TPP
Ultimately, however, Trump is a businessman. And that means he’s a free trade guy.
Just like in the art of the deal, he’s going to negotiate with other countries new deals that will be in our benefit, and use tariffs as threats for leverage. And in the end, if we do slap tariffs on countries, it will be done to wring concessions, and end us on the better side of the deal for free trade in the long term.
My plan of attack over the next week
As always, everything I say about the future could be completely wrong.
But it’s clear that the market tanking in the short term is in the cards at least. (EDIT: 11/11/16 – Just goes to show, we never can know what will happen!)
Think of it like a Walmart sale. That’s good news for the long term investor.
So here’s my plan of attack for the next week:
1. Remember that slow and steady wins the race
2. Use declines as opportunities – Don’t jump in too soon, aim for 10% correction or more (if lucky)
3. Buy companies on my watchlist as they go on sale.
That’s all. Pretty simple. Now I’ve been up all night watching the events unfold, and since I’m not sure what I’m typing anymore, it’s off to bed.
What say you? Are you looking forward to a Trump presidency and making America great again? Or do you think we’re standing on the precipice of the end of the world as we know it? Are you going to use volatility to buy? Or are you selling? What’s your plan?