The markets are still digesting how a Trump economy will function. There are many economic questions that remain unclear. As I stated last week, these wild moves in the market may prove to be premature as actual policy remains uncertain. However, I’m still trying to answer these questions with limited information. Below are a few questions along with my responses, to give you a better idea of how I’m thinking on these topics.
My personal opinion is that the short-term economic picture is brighter, but there is now a greater chance that things get messy over the long-term. Trump is inheriting a strong economy, which is the exact opposite to how President Obama rode into office in 2008. In 2009, Obama said that “buying stocks is a potentially good deal”. He turned about to be a very good stock forecaster. On the other hand, Trump said last month, “stocks are in a big, fat, ugly bubble”. It is yet to be determined if he actually believes that the stock market is in a bubble, or if he was just trying to be “politically correct”. If these comments do ring true, it will help to have active portfolio management and solid risk management over the next 4 years.
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