Willingdon Views

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Thursday, 10 November 2016 08:13

In any surprise event such as this, there are ALWAYS potential positives as well as potential negatives. I'll try to outline both based on what we know today.

First the negatives:

Trump has had no political experience, tends to shoot from the hip, and has been, perhaps by design, politically insensitive to a lot of groups. This type of personality unsettles people, and rightly so. Who is the real Trump? Do we really know? Unknowns tend to increase investor anxiety making markets very volatile.

Now the positives:

Our economy has struggled to grow over the past eight years, the weakest recovery in the post WWII era. If Trump can reduce the regulatory burden, work with the Republican congress to implement tax reform, the potential economic boost could be enormous. Beyond that, the expectations for Trump, especially among those who did not vote for him, are very low. If he turns out not to be the disaster they expect, then the market may rally even more so.

From our perspective, the next few weeks will be crucial to see how Trump builds his team of advisors and who he places in top positions within his administration. One final, important point - Trump largely won a populist, grass-roots campaign. He isn't beholden to any special interest group, or wealthy benefactor. So, he is "free" to build his team as he sees fit. In a nutshell, we could be witnessing the beginning of the end to crony capitalism, which could potentially have a profoundly positive impact on our economy and markets.

We will have more to share on this historic event in the days ahead. In the meantime, please let us know if you have any thoughts or questions.

Michael Kayes, CFA

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