“You’re Hired!”

trump-youre-hired-002“You’re hired!” was something The Apprentice reality show viewers heard at the end of every season as someone emerged from a group of highly different “characters” and was chosen as the winner. In a surreal twist, Donald Trump, the star of that show, has just been hired as our next President after a surprise victory over Hillary Clinton highlighting a populist uprising defeating the status quo.

No, November has not been just a bizarre dream; although on paper, both the Chicago Cubs winning the World Series and Donald Trump winning the US Presidency, seems about as outlandish as a UFO. These events have actually happened! Donald Trump will be our next President for at least the next four years and the Cubs most certainly will become a dynasty during that time. We are in for change. But is change necessarily a bad thing? At this point, the voters have voted and we no longer have a choice. Hence, time to embrace that change. However, what does it mean for you and your money?

First off, this is not Brexit #2. Recall that the markets fell significantly following the surprising June 2016 Brexit “Leave” victory, only for the market to recover fully in several days’ time. Yes, there were times last night when market futures were down big, but it didn’t prevail. Markets opened in steady fashion this morning and are up, not down, close to 1% as of this writing.

That, too, may come as a shocker to many as until now the market had been fluctuating based on Hillary’s success chances. See, the market had been pretty cool with status quo and hesitant of uncertainty, which Trump would undoubtedly bring to the table. But if we look at what Trump will be working on in the early months of his Presidency, we can see that it’s quite possible that it provides positives:

  1. Putting forth a giant infrastructure agenda in the likes of Eisenhower
  2. Working on trade reform which will most likely lead to inflation and thereby helps the banks
  3. Working on healthcare reform – most likely replacing the Affordable Care Act with something that – well, let’s face it – has to be better
  4. Decreasing regulation which will make many corporations and financial markets happy
  5. Working on tax reform – both individual and corporate, including repatriation (bringing back perhaps trillions of dollars of American companies that are currently overseas)

Many of these are pro-growth / pro-economy and the market likes that. Furthermore, for those that feared the Trump bulldog approach, the bark we heard on the campaign trail will be bigger than the bite as there are roadblocks to the rhetoric. The legislative and judicial process tends to mute campaign promises. Trump will not enjoy unlimited power. Smart negotiations will likely be made.

The fact of the matter is that this is a healthy economy in the US right now and poised to get better. GDP is up, unemployment is down. It’s not as “gloomy” as one may feel. This new business-friendly administration coming in will look to keep that going.

In conclusion, polls and markets will remain unpredictable. Don’t let politics overrule how you invest. Here at DWM, we’ve constructed portfolios for our clients to stand the test of time. Sure, we’ll have blips here and there like Brexit and the one we were bracing for this morning that didn’t happen. Volatility will always be a part of investing. The key is to remain invested in a diversified fashion for the long-term and don’t let your emotions turn into knee-jerk reactions you’ll ultimately regret. Last night’s event may have been a bit of a shocker, but the sun did indeed come out this morning and is shining down on America. We are in for a little change. But we should embrace this change and come together as a country to make it stronger than it has been. Hey, if the Cubs can do it, why not the good ole US of A?!? “Holy Cow” as Harry Caray would say!

In America We Trust

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Americans have some major trust issues as we approach November 8th. We are mired in distrust of our Presidential candidates, Congress, the media and each other!  It is election week and the biggest hurdle facing both of our Presidential candidates is their inability to inspire the trust of the American voters.  Poll after poll highlights this seemingly national concern and has been fodder for debate all year.  In a September Wall Street Journal poll, far less than half the voters believe that either of the major party candidates are trustworthy.  A recent CBS/NYT poll showed that 2/3 of likely voters view both candidates as untrustworthy.  Not only that, but we don’t even trust each other.  A Gallup poll, also in September, showed that only 56% of us have a great deal or a fair amount of confidence that our fellow Americans will make good judgments about the issues facing our country.  Wow!  Not surprisingly, the same poll shows that only 32% of us have even a fair amount of trust in the media and 57% have little or no confidence or trust in those currently in office or running for office.  That is an awful lot of American cynicism!

Are these political campaign season statistics and events unprecedented in history?  Nope.  Even the Founding Fathers were full of distrust.  The framers of the Constitution created the Electoral College to decide the presidential election. Instead of allowing for “one person, one vote” presidential elections — as the democratic process would imply — the founders opted to place the responsibility in the hands of a select few who “will be most likely to possess the information and discernment requisite so complicated an investigation,” or so wrote Alexander Hamilton in The Federalist, No. 68 [source: League of Women Voters].

Because Electoral College voting does not necessarily reflect the vote of the American people, a president can be elected without receiving the majority vote. Looking back in history, we have had a few disputed outcomes to our Presidential elections that caused distrust on all sides.  For example, in 2000, George W. Bush won the presidential election by winning in Electoral College votes even though neither Bush nor Al Gore, Jr. had a clear popular vote victory – remember the hanging chads in Florida?  In 1824, Andrew Jackson charged that a corrupt deal led Congress to award the Presidency to John Quincy Adams when no candidate received enough Electoral College votes.  Sometimes we don’t even trust our democratic process!

Of course, the financial services industry is under perennial scrutiny, especially this year with some of the banking industry issues we have seen.  In order to restore a sense of trust, the Department of Labor rule defining fiduciary responsibility will begin taking effect in 2017. It will require that financial institutions and advisors give advice in the “best interest” of the client and that they comply with a professional and reasonable standard of conduct and compensation.  See our previous blog:  http://www.dwmgmt.com/fiduciary-standard-closing-in-on-reps-and-brokers.   DWM welcomes these changes and believes it is the right way to do business.  As members of NAPFA, the National Association of Personal Financial Advisors, we have always adhered to these principles.

The National Association of Personal Financial Advisors (NAPFA) is the country’s leading professional association of Fee-Only financial advisors—highly trained professionals who are committed to working in the best interests of those they serve. Since 1983, Americans across the country have looked to NAPFA for access to financial professionals who meet the highest membership standards for professional competency, client-focused financial planning, and Fee-Only compensation.”    http://www.napfa.org/

 

One thing we can trust is that, once this election is over, there will be a renewal of the iconic American optimism, no matter who wins.   We certainly hope that, as Americans, we can begin to re-establish a belief in our democratic process, in our leaders, in the media, the financial services sector and in each other.  At DWM, we are confident that we have earned the trust of our clients and will continue to operate with the integrity that you have come to expect.  Happy Election Day-please make sure to vote!!