The election result came as a surprise to many and caused some uncertainty in the markets overnight. Many investors are wondering how all of this impacts their portfolios and if they should be making any changes.
While the evening’s market volatility may have been unnerving to watch, the negative impact on the market didn’t last long, and markets have already bounced back as of mid-day today. Should volatility pickup anew, it is important to know that Pinnacle model portfolios currently hold a variety of diversified asset classes and hedges that should help absorb any short-term volatility that comes from the election. Given our somewhat conservative positioning, we plan to utilize any outsized negative reaction in markets that might occur as an opportunity to build our portfolios back in line with the appropriate benchmark level of equities.
In terms of what a Trump Presidency means to investment positioning, our thinking is that the situation is so new and fluid that it is premature to have conviction in what the long-term ramifications will ultimately be to the economy, earnings, and markets. Clearly there are some risks for markets in the form of protectionist trade policies and a lack of certainty regarding future policy in a GOP dominated regime. But there are also reasons to believe that the economy could benefit from future fiscal initiatives and policy that may be far less radical than some have been fearing. Given the balance of risks and potential rewards, the election by itself is not driving our asset allocation positioning at the current time.
Over the coming weeks, we’ll be digesting and monitoring election based information as it comes in, and will remain open to any material facts that could alter our overall asset allocations. The investment team will also spend a good amount of time weighing which asset classes and sectors stand to win or lose given this changing of the political guard. As we digest incoming information regarding what the new regime means for a variety of markets, there is the potential for various rotations between asset classes and sectors to reflect changes in our views.
As always, please contact your Wealth Manager for further information and to discuss your portfolio.