Money doesn’t save itself. It doesn’t invest itself. It requires action upfront. Even if an investor engages in passive money management, he first should decide on his goals, his tolerance for risk, how he wants to invest, where he wants to invest, where the money will come from and if he can save/invest in a disciplined manner to help work toward his financial objectives. That requires a lot of action.
The stock market was already experiencing one of the longest-running bull runs in recent history, but it was given an extra boost when Donald Trump won the election last year. From Election Day on Nov. 8 to April 18, just shy of President Trump’s 90th day in office, the Dow Jones Industrial Average climbed 12 percent and the S&P 500 experienced a 9.8 percent increase. However, the market experienced some downslides as well, including an eight-day decline in March, its longest losing streak since 2011. Now the question remains for the rest of 2017: How might Americans’ confidence — or lack of confidence — in our commander-in-chief impact activity — and volatility — in the securities markets?
With the Trump Administration just entering its four-year stretch, maintaining a buy-and-hold strategy could be difficult should confidence subside. On the surface, campaign promises that won the election bode well for economic and investment growth. For example, corporate and personal income tax reform could spur more expansion and consumer spending, leading to stronger company earnings. Investments in U.S. infrastructure could produce more jobs and higher wages. A growing economy would generate higher inflation, likely leading to further hikes in interest rates. Higher rates generally correlate with a rising value of the U.S, dollar, creating a tailwind for exports from other developed countries. This in turn could invigorate global markets, providing U.S. investors with more international investment opportunities to help diversify their portfolios.
However, all of those positive benefits are predicated on Washington taking action. The legislature must pass tax reform laws and a budget that features an outsized allocation to infrastructure spending, as well as roll back burdensome regulations that would put the brakes on how quickly these benefits can be realized.
Clearly, active money management isn’t just an investment term. It’s a fundamental component for helping to build wealth at the individual, corporate and government levels.
All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice. Contact us at info@securedretirements.com or call us at (952) 460-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.
