The way you respond to surprises is crucial to long-term investment success.
The US electorate has spoken on the 9th of November 2016 and for the first time since the 1950s have voted a non-politician to be president of America. After a long and controversial election cycle, the provocative Republican candidate has claimed victory.
But now what does this mean for your investments?
Markets ended on a high note Wednesday after suffering dramatic drops early in the morning after Donald Trump’s historic presidential victory. That has some investors wondering what a Trump White House could mean for their investment portfolios.
During his campaign, Trump proposed major policy changes that could have huge implications for businesses and consumers. There could be more market volatility in the near term as investors and economists try to sort through what he might be able to accomplish and how those ideas might affect the economy.
Markets could be volatile until there is more clarity President-elect Donald’s policies.
One thing investors know is that markets hate uncertainty. A period of considerable volatility and uncertainty still lies ahead as this is somebody who had never held elective office.
The problem is that the more we check in on market movements, the higher our chance of seeing a loss and the more susceptible we are to making mistakes – this is referred to as myopic loss aversion.
It may be painful to watch the wild swings, which tend to appear after major events like this. But the average investor saving for retirement should probably avoid making any major changes right now.