Marc Cuniberti: The Trump factor in investments
May 7, 2017
As a financial advisor, I have to analyze and communicate market information to my clients. They likewise should communicate their needs, expectations and preferences as to what they want to invest in, what they do not to invest in, how conservative or aggressive they want to be and what their needs are both short and long term.
It's a forgone conclusion to say that many have received phone calls from their clients regarding their concern over the Trump election and how his policies and actions as President might influence markets. Some clients have expressed more than a minor concern and some have even requested an all cash position preferring to be out of the market all together.
Although definitely the most controversial president elected in recent memory, his actual effect on markets will likely be tampered by the reality of what he actually can and cannot do.
CHECKS & BALANCES
Our political system has many checks and balances designed to limit the power any once branch or person has and in that may lie the answer to the many concerns clients might have.
Any major policy action will require the support of the legislative branch and in many cases also the judicial branch of government. Although Trump may talk a big game that his many radical ideas will be carried out, in actuality, his hands will be tied on many issues as all Presidents hands have been.
That said, clients concerned about Trump policy will take some comfort in knowing that portfolios do not have to be all "long." This means one does not have to structure possible gains around an exclusively rising market.
Proper allocation and a diversification of assets may have a tendency to counter balance each other no matter which way the market might go. Although no one can say with certainty that the performance of any investment will go one way or the other, advisors can allocate certain contrarian positions based on their historical performance. Keep in mind past performance of any asset does not guarantee success and a knowledgeable advisor will know that.
A mix of fixed income, traditional stocks and funds, cash and cash equivalents can be tailored to reflect a more conservative posture for clients concerned with the new administration. Advisors can also look to areas the new president has pledged support by reviewing his campaign promises and Trumps suggested areas and programs where funds might be spent by.
Although investors are correct in voicing their concerns, history has a pretty good track record in demonstrating it can be difficult in today's political structure for any one person to drastically alter the landscape of the global financial markets considerably and for an extended period of time.
If you're concerned about the direction your investments might take in light of the current administration, a meeting with your advisor will be beneficial to insure your concerns are heard and your portfolio holdings reflect that concern. An experienced advisor should possess the knowledge to structure a portfolio to reflect the client's needs and expectations at any point in the investment cycle. Your opinions matter and you should not be shy in voicing them, especially when it comes to your financial future.
After all, it's your money.
Please remember discussions in this news piece should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. This article expresses the opinions of Marc Cuniberti. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is http://www.moneymanagementradio.com. California Insurance License # OL34249
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