Since last Wednesday, depending on your political leanings, you have been celebrating or in mourning. Or maybe you greeted the news with indifference.
Now, as the dust settles, you might be wondering what this all means for your portfolio.
Love him or loathe him, Mr. Trump is a disruptive force and
Mr. Market hates disruption.
Back in November 2016 that was my analysis, and I was sorely tempted to move to cash. Instead, I stuck to my discipline and remained fully invested. No one can predict the market even – especially – when the road ahead seemed so clear.
Good move, it turned out. Despite my instincts to the contrary, Mr. Market turned in a very strong performance over those four years.
My guess for the next four years?
So far, Mr. Market seems very pleased with the election results. But to me, it feels like we could see a significant bear market sometime down the road.
Love him or loathe him, Mr. Trump is a disruptive force and Mr. Market hates disruption. Plus, one is due. We are at the pinnacle of a massive 15.5 year bull market* and such runs don’t last forever.
So, time to move to cash?
Not for me. My discipline remains the same. No one can predict Mr. Market, least of all me. I will remain fully invested.
Should my bearish speculation prove correct, I will have tied myself to the mast and will stay invested, and investing, as it rages and passes.
Should the Mr. Market continue this historic bull run, I’ll be right there with it.
This is The Simple Path to Wealth.
For more:
Time Machine and the future returns of stocks
30% Up years in the stock market
*I’m dating this from March 2009 when the S&P 500 hit bottom in the crash of 2007-09 having dropped 57%.
Technically we have had another crash and bear market since then.
During covid, from Feb. 20 to April 7, S&P 500 dropped 34% and recovered; a record rebound of less than two months.
Jan 3-Oct 12 2022 the S&P fell 25.4% over just ten months.
While sharp declines, both these were so short in duration they are now seen as blips in this overall bull run.
