TRUMP AND THE FINANCIAL MARKETS IN 2017
As originally appeared in The Jerusalem Post on January 12, 2017
“2017 may be the least certain in years, with higher-than-usual risks and a binary set of outcomes that have dramatically contrasting results: euphoria or fizzle, significantly higher or lower than the base case,” – Savita Subramanian, Bank of America Merrill Lynch.
How will President Trump impact the markets? Will the economy in China continue cooling? Will there be more “Brexit” like results from other European countries? The most frequent question I have received over the last few weeks is “What’s your outlook for 2017 and the stock market?” For those of you, who have yet to ask me this question, consider yourself forewarned. If I become a bit testy and give you a snippy answer, forgive me. I HATE this question. Do people really think that only I possess the secret market information; the secret sauce as I like to call it, and that I can tell the future? Every year Wall Street pundits come out with their predictions for the year ahead and year after year most of them get it wrong. Unless of course you take the approach of the Bank of America Merrill Lynch prediction quoted above. That approach uses fancy terms and phrases and says nothing. Wow, binary outcomes! That means the market will either go up or go down.
Moses
In a few days we start to read about Moses. In Deuteronomy 34:10 it says, “Never again did there arise in Israel a prophet like Moses—whom the LORD singled out, face to face.” While Moses was the greatest prophet to ever live and was one of a select group of people to experience this phenomenon, prophecy ended over 2400 years ago! But for some reason everyone thinks that they can accurately predict the future. As I have written in this column numerous times, my mother of blessed memory was fond of saying, “a Naár is a navi–prophecy was given to fools.” At this time of year I am reminded of that saying all too often.
Who cares
Does it really matter what the forecasts predict? Even if correct they are dealing with short-term movements, not the long term. I recently had a conversation with a client who lamented not owning enough gold back in 2008-’09. I mentioned that instead of panicking he held tight and yes the portfolio dropped during that year, but since then it has come roaring back and he is doing great. There was no need to buy gold and in fact had he bought a lot of gold then and held on, he would have lost money.
The real secret sauce
I know that I sound like a broken record but the way to grow wealth is to buy good investments and hold them. If the market were to drop, buying more has been proven over and over to be very profitable. If short-term market movements make you nervous, you either have no business investing in the stock market to begin with or at the very least it’s a sign that you must dial back your exposure to stocks. As Warren Buffet said, “I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”
As I have written here previously, Investors need to remember that there are no shortcuts when it comes to investing. There is virtually no way to get rich quick in investing. Vis-à-vis the stock market, over the long-term what happens during 2017 isn’t so relevant. Want to build wealth for the long-term? Stay focused and disciplined with your investment portfolio, don’t panic and make sure your investments match your goals and needs.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates. Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.
