I admit, I love this kind of stuff. I was up late watching the Brexit vote and I was up late last night watching our presidential election. As Trump closed in on 270, I also loved watching the stunned faces of many broadcasters. Just as Brexit, last night’s election has proven that modern day polling as a science is dead. Almost every major poll was unable to forecast the correct results and everyone is stunned. But no matter the outcome, I remind myself how much it actually matters to the markets. Very little. Study after study shows that stocks perform just as well under a Republican or a Democrat.
Whatever your political leanings, we must focus on how it relates to your portfolios. Those things are: the economy, earnings, and employment. In all three cases, things are going in the right direction. Yes, there are risks out there. There will always be. We always have to remain vigilant against the next tech wreck or the next sub-prime bust. As for the economy, GDP growth just came in at a surprising 2.9%. Earnings (profit) growth has finally turned around after almost two years in the red. Employment continues to improve and American paychecks are rising. With these factors we continue to be moderately bullish on stocks and remain focused on the long term improvements in the economy. The market’s reaction over the next few days has little to do with the longer term (see below). We view this as an opportunity. We will review allocation and make changes to your allocations as needed. If you have a strong opinion one way or another, please give us a call. We’re here to listen.