How the 2024 U.S. Election Results Could Impact Your Investments

By Samuel Mather-Holgate

It’s already been a week since the US general election and with Donald Trump elected to a second term as President of the United States, it’s natural to wonder how this change in leadership might affect financial markets and, in turn, your investments. While political developments can sometimes spark uncertainty, successful investing is about staying focused on long-term goals and resisting the urge to react to short-term market fluctuations.

In this article, we’ll discuss the potential impacts of this political shift on your investments and explain why maintaining a steady, diversified approach is essential during times of change.

Political Events and Long-Term Investing

It’s only natural for political news to grab headlines and generate concern. However, investing is about the big picture, not the day-to-day reactions to headlines. While media coverage can emphasise short-term fears, our role is to help you look beyond the immediate response and keep your sights on your long-term financial goals. Politics and investment strategies are distinct areas, and our commitment is to manage your portfolio with stability, resilience, and growth over time.

The Initial Market Reaction

With President Trump re-elected and his party holding a majority in Congress, he has a unique opportunity to advance his policies on trade, the economy, and fiscal matters. However, it’s worth noting that his margin of victory was narrow, meaning some policies could face challenges as they progress through Congress.

In the immediate aftermath of the election, we’ve observed a few market trends:

• U.S. Dollar Strength: The dollar has shown strength, reflecting investor anticipation of potential trade tariffs and economic changes.
• Rising Bond Yields: U.S. government bond yields have increased, suggesting that the markets expect inflation to rise.

While these shifts may seem significant, it’s crucial to recognise that market reactions can be temporary. There is still considerable uncertainty about which policies will ultimately be implemented, and how they might affect the global economy over time.

Our Investment Approach in Uncertain Times

Your portfolio has been designed with moments like this in mind. By diversifying across various assets, we aim to build resilience into your investments so they can adapt to changes in the political and economic landscape. Here’s how we approach uncertain times:

• Inflation Protection: To guard against inflation, your portfolio may include assets like inflation-linked bonds and certain financial stocks that may perform well if inflation rises.
• Defensive Holdings: Defensive equities and government bonds, that also may be in your portfolio, tend to be more stable during periods of economic uncertainty.
• Balanced Strategy: Rather than placing all assets into any one expected outcome, we maintain a well-rounded portfolio that’s designed to perform over the long run, regardless of short-term political or economic changes.

The Importance of Staying the Course

In times of political change, it’s common to wonder whether adjustments are needed. However, history shows us that markets have the ability to adapt and recover from shifts in political leadership. Reacting impulsively to short-term volatility can often be more detrimental than beneficial.

If you are invested through one of our discretionary fund manager partners, they will already be analysing your portfolio to try and take advantage of the changing fundamentals, whilst retaining the level of risk we have instructed to them.

Remaining steady and keeping perspective can help you avoid unnecessary risk and take advantage of potential market opportunities as they arise. Temporary turbulence can present chances to acquire valuable assets at attractive prices, which may contribute meaningfully to returns over time.

Final Thoughts

As we monitor the evolving situation, our approach remains focused on your long-term financial wellbeing. We’re committed to maintaining diversified and balanced portfolios that can withstand changes in the market over the long-term, so you can stay on track to achieve your goals.

If you have any questions about your portfolio or would like to discuss any specific concerns, please don’t hesitate to reach out to your adviser, or contact us HERE and we can arrange a meeting. Our goal is to give you financial confidence through comprehensive advice, and to support your financial goals—no matter the political landscape.