1. Short-term volatility isn’t unusual in election cycles.
Elections happen on a regular basis, and investors typically endure fits of volatility as markets digest the possible implications of policy intentions and the balance of power. However, we think long-term dislocations are unlikely.
2. Don’t overlook the really big market drivers.
Stories about policy changes and the changing power structure are dominating he media cycle, but there are other big influences on markets: government finances, central bank policies, oil prices and currency changes are among them.
3. Distinguish campaign rhetoric from actual policy proposals.
Now that the tumultuous campaign is over, President-elect Trump is busy selecting cabinet members and making the transition to the White House. How will campaign messages translate into policy proposals—and will they make it through Congress?
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 building sound portfolios and enhancing performance with high-conviction insights and active positioning.