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Post-Election Investment Thoughts from HFA

Peter K. HooverNovember 9, 2016

Markets

The election is over. Finally!  After a grueling and hard fought campaign, Donald Trump will become the next president of the United States.  Obviously he has a great deal of work to do to unite both the political parties and the United States.  We hope he can truly “make America great again”.

The financial markets around the world did not expect Trump to win and as a result of the uncertainty with a new president, policies and initiatives, the reactions are mixed.  We expect a great deal of volatility as America and the world adjust to a new president. 

Given all of that uncertainty, there are a few important points to remember.

  1. Adversity brings opportunity.  When the markets fall, share prices decline and buying opportunities arise. Buying securities on sale is better than paying full price.
  2. Time tends to heal all wounds.  Over the course of time, there have always been those “this never happened before moments” whereby history was written before our eyes. Markets generally fall during these uncertain moments, but always seem to return to normalcy.  Maintaining your shares during a down market will allow them to increase in value when the going gets better. 
  3. Proactive cash management.  For our clients who have been taking a systematic withdrawal from their account or still need to take their Required Minimum Distribution before year end, our investment team raised cash earlier in the year in better market conditions to help to make sure we don’t have to sell when prices are lower.  For those clients who are sitting on cash and waiting to invest, they can take advantage of any buying opportunities.
  4. Proper asset allocation is paramount.  Our advisors and planners review asset allocation at every annual review.  Having the proper balance of equities to fixed income creates the proper amount of risk commensurate with your financial goals. The asset allocation of your portfolio should not change based on market conditions – rather the asset allocation should only change when your financial goals have changed or a life event occurs. 
  5. Diversification, Diversification, Diversification.  We have structured all of our clients’ portfolios to be as diversified as possible.  Our investment team has built your portfolio to not rely on one stock, one sector, one industry or one country.  Your portfolio has the benefit of many professional managers with a tremendous amount of experience.  These managers have been personally selected by our investment team and your portfolio composition has been constructed to help assure proper diversification. 
  6. Rebalancing is the key.  History has shown us that buying low and selling high is always the correct method for purchasing securities and rebalancing is the best method to achieve that goal. When your asset allocation is off target due to market conditions, using cash within your portfolio or selling an existing security at a higher price to purchase another security at a lower price should help your portfolio in the long run.

Our team at HFA is here to help!  We have spent both time and money in developing our investment management software so that we are prepared to make any transactions within your portfolio that may be necessary.  We have a fully staffed investment team that is trained and ready to answer your questions or make sure you are comfortable with your overall investment portfolio.  Our planners and advisors know your financial situation very well and can help you to respond to any issues that may arise.

Please do not hesitate to contact us if you have any concerns, questions or issues about your personal financial situation (610-651-2777). During these uncertain times, it is good to have certainty in your relationship with HFA.