Donald Trump Win Sends The Markets On A Wild Ride

The Record ( — November 10, 2016

staff writer
The Record

Donald Trump's stunning presidential victory sent stock values on a wild ride that illustrated a perennial investment lesson: even when world events slash stock values, the effect is always temporary, and investors are better off sticking to their long-term financial plans.

Before Trump, Brexit was the most recent example. The British vote to leave the European Union roiled stock markets for a time, but they soon recovered.

In the case of Wednesday's quick market rebound, "obviously people are recognizing that Trump is pro-business," said Charles Lieberman, chief investment officer of Advisors Capital Management in Ridgewood.

He said that certain industries are likely to benefit from a Trump presidency, including the construction industry, because Trump has talked about more infrastructure investment.

Trump's election will likely have another effect on investors and consumers. Though Trump criticized his opponent, Hillary Clinton, for her ties to Wall Street, he has also supported efforts to roll back some of the regulations on the financial industry. He has promised to weaken or dismantle the Dodd-Frank Act, which established the Consumer Financial Protection Bureau in the wake of the 2008 financial crisis. Banks and financial institutions have pushed for a change in the regulations, and there's a bill in Congress to do that.

Phyllis Salowe-Kaye, head of NJ Citizen Action, said that such an action would remove important protections for consumers. She said the need for regulation is evident in the recent Wells Fargo scandal, in which customers were charged fees for more than a million accounts that were opened without their knowledge.

"We have plenty of reasons to be concerned about the [consumer] protections that have been put in place," Salowe-Kaye said.

It's still not clear how Trump's election will affect other areas of financial planning. He has called for lower taxes on the wealthy, as well as the end of the estate tax. But Thomas Orecchio, a principal at Modera Wealth Management, said that it's not clear how those plans will play out, even though the Republicans will control both houses of Congress as well as the presidency.

"We are not jumping to any conclusions when it comes to estate planning and tax planning," Orecchio said.

Overall, many advisors recommended not jumping to conclusions.

"Stay focused, keep perspective, and, above all, don't make drastic changes to your portfolio," said Roger Aliaga-Diaz, chief economist for the Americas for Vanguard, the large financial services company. "Volatility increases in every election, particularly in years where there is a change of party in the presidency, and sooner or later, markets always go back to fundamentals.

"Keep calm and carry on," Lieberman said.

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