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US Election Result – Trump Slump?

John Cooper Director based at our Wimborne office provides some insight into the impact of the American election on the financial markets.

John says ‘For the second time this year, we woke up to a political surprise on 8th November the like of which most of us are not used to seeing in a generation, let alone two in the space of five months’. I felt it would be useful to set the record straight on some of the comments you will have seen in the press and reduce any nerves you might have by reminding you of some of our investment fundamentals.’

General reaction to Donald Trump’s election has ranged from surprise to outright panic; the more sensationalist headlines will naturally cause a degree of nervousness in some investors. At the time of writing, the world’s major stock markets; America, Japan, UK, and Germany have all avoided a sharp fall. In fact, most are showing a slight rise, which may, or indeed may not, have anything to do with the election result. However, over the coming months and years, as the Trump presidency takes shape, we may expect to see some market turbulence. On a positive note, his promise to invest in infrastructure could well be good news for company earnings and therefore shareholders. On the negative side of the ledger, his relationship with China is poor and much of his foreign policy remains unclear.

Whenever large stock market fluctuations occur, for example in the days following Brexit, many investors may naturally become nervous. But, as a client of Heritage Investments, it is important to remember two key points.

Firstly, that your advisers are here to listen to your concerns and explain more about how any market turbulence may affect you.

Secondly, some investment fundamentals worth remembering:

• Stock market investments are by their very nature long term; volatility is to be expected and from time to time large falls will occur.

• Investors should remember that they are, in general, rewarded for sitting tight and riding out stock market falls; this was certainly the case in the weeks following Brexit.

• You are investing to help meet long-term objectives; unless these have changed over the past few weeks, making immediate changes to your investments based on the election result is unlikely to make sense.

• Selling investments, immediately following a fall in value, crystallizes the loss and should be avoided where possible

• Remember, in all likelihood you are invested in a diversified portfolio which will include other types of investments, often called asset classes and not just shares.

If you are concerned at all and would like to discuss your investments, please do get in touch with your financial adviser.

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