After Trump’s win patience may bring profit - November 09, 2016

After Trump’s win patience may bring profit

To the surprise of investors and markets Donald Trump beat Hillary Clinton to be the 45th president of the United Stated. The win was against the polls so markets (and USD) reacted nervously with some rapid falls. There’s no need to panic though, because analysts have expected 5-10% corrections regarding the S&P500 index due to a Trump victory, and 5% plunge was seen in the futures market after the news came out. During the early European trading session most of the price fall has been eliminated. What’s more, Trump’s triumph speech was rather calming.

The fall of the market started in Japan (due to different time zones), when the first results came out, and then the plunge went over to the European markets as well. Basically every market had a fall between 2-5%, the USD weakened too. The biggest loser was probably the Mexican Peso, as Trump attacked the country severely in the past. On the other hand, some commodities like gold started to strengthen as investors consider them safe havens. But these moves generally reversed after the first panic.


Performance of S&P500 index futures in the last days
Most analysts and investors underlined their surprise and the uncertainty that comes with Trump. This was the reason behind the rapid changes we saw. As we wrote yesterday, the richest and a part of the market would have preferred Clinton’s win, since she would have brought less change to the business world.

Altogether: markets may be weaker for some weeks, but as nerves calm down and the surprise goes away, the stock market goes back to the normal, namely to the general uptrend. Some elements of Trump’s economic plan is generally good for US businesses as corporate tax might be lowered and probably there will be fiscal expansions and infrastructural investments in a big volume.

As for now the best idea would be to keep to already existing long-term investments, since stability is their biggest strength: even unexpected events can be corrected on the markets on the long run. Now there’s also a good chance for the markets to shake up, even if Fed’s rate hike may be postponed again. Another (bit riskier) possibility is to start investing now, there are bright stocks with good value to be bought during this correction and dollar may be a great chance to buy low (and later sell high, as the main principle of investing goes).

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving high returns on their investments.

(Header image: Gage Skidmore)