Another day, another dollar goes the old saying, but in the case of last week that just wasn’t true. With fears of a Trade War looming between the U.S. and China, equity markets were down almost 6% for the week. Trumps’ Tariffs have spooked investors and stocks reacted predictably with selling enthusiasm. So figuring out what to do next is top of mind for us all. In that regard, here’s the best course of action: Do Nothing. We build portfolios to withstand market volatility, through the inclusion of lower risk asset classes including government and corporate bond funds. Further, the equity fund positions in client portfolios have large cash balances, which enable your institutional money managers to capitalize on market downturns.
This more conservative approach means that political decisions have less of an effect on your hard-earned savings.
Politics are only one factor in market behaviour. Politicians do matter -especially one as largerthen-life as Donald J. Trump. But as outsized an ego as Trump has, it is tiny in comparison to the most important factor of all: Fundamentals. In this regard, the global economy is doing quite well -better then ever since the Financial Crisis of 2006-2008. Disagreements on the balance of trade (which is massively one-sided against the U.S.) will roil markets short term, but long term Fundamentals will ultimately, well, trump all other considerations.
Stay focussed on the medium to long term and ignore the background noise. Over either time frame, the fundamental outlook is good. In the meantime, your portfolio is just fine. You’re in safe hands.