Your time on the stage as the greatest political upset is, well, history. Donald Trump’s defeat of Hillary Clinton is the new shocker for the ages. I would guess that even many Trump supporters were surprised.
Now on to what this will mean for everyone. The Financial Times from London says this “marks a thunderous repudiation of the status quo” and The Economist says that Trump was carried to office on a tide of “popular rage”. We don’t know how history is going to view all this but right now Trump’s victory looks like a sea change in American life, thinking and politics equivalent to FDR’s New Deal policies in the 1930’s and Ronald Reagan’s election in 1980. Journalism they say is, “history written under a deadline”. This Newsletter can’t possibly know what is going to happen the next four years but we will take a stab at two things that seem pretty certain.
First, “it’s the Economy baby”. To make America Great Again you can be sure there will be tax cuts and a major expansion in infrastructure spending. It’s interesting that the Republicans now might cause the next big increase in government debt. Historically they are the party of small government and balanced budgets but it doesn’t always work out this way. Tax and spend Democrats may have to eat their hearts out. The Republicans are on a spending spree, deficits be damned.
The second thing that is pretty certain is we are going to see a definite shift to the right. Be it government regulation (weaken or eliminate Dodd-Frank), healthcare (Obamacare may be toast) or the environment, government policy will move right. And most ominously for the Left, we will see a decidedly more conservative Supreme Court and Federal judiciary. This could be President Trump’s most lasting legacy.
How should investors react to all this? Our best advice is to take a deep breath and sit tight. As Jason Zweig the columnist in The Wall Street Journal said, “The worst possible moment to make clear and durable decisions is when you are surprised”. Better to go sit quietly in your room for a bit. We just don’t know how President Trump will govern. Immediately after the election he turned quite Presidential, even backtracking on some of his pet projects – maybe a ‘fence’ instead of a Wall, maybe no special prosecutor to investigate Hillary and maybe let’s keep parts of Obamacare.
As always the future is very uncertain. A key to successful long term investing is self-control and self-control is the one thing we have complete power over. Maintain it at all costs. All is not lost that is in peril.
