It Is Official! Trump Wins The White House: Is It Time To Panic?

There are nearly two months to go before 2016 comes to an end. It has not been a boring year by any standard.

Near the start of 2016, global financial markets experienced a sudden correction. Then in June, the world saw a shocking geopolitical development when the United Kingdom voted to leave the European Union. And now, the United States has elected Donald Trump as its 45th president.

As the vote counting progressed and Trump looked progressively likely to win, all hell broke loose with stock markets around the world. The win by Trump is certainly a surprise for many. And it’s a development that the markets clearly dislike. But, is it really all gloom and doom for stocks with Trump as President of the United States?

The future is always scarier than the present. Over the past century, the world has seen revolutions, chaos, wars, the rise of dictators and extremists – and yet, we have always come back stronger than before. The United States has also seen its fair share of less-than-perfect presidents over the past two centuries.

Yet despite all the troubles the world has experienced, the global economy – and that of the US – has grown. Businesses continue to thrive and the world moves on. Moreover, the US democratic system has been shown to be one where even a president does not yield unlimited power.

As investors, it is important for us to place more focus on the business of the company we are investing in and less on the macro environment, which is beyond anyone’s control.

As investors, we need to ask ourselves: Even if Donald Trump is the US president, would that stop people in Singapore from visiting Q&M Dental Group (Singapore) Limited’s (SGX: QC7) dental clinics to have their teeth looked at? Would shoppers stop buying groceries at Sheng Siong Group Ltd’s (SGX: OV8) namesake supermarkets?

If the answer to both questions is a “No” (my answer’s a “No”, as well), why are both companies seeing their shares tank with the general market?

Crowd mentality in the stock market is strong. A rallying stock would encourage more buyers to join in, creating an even stronger rally. Similarly, a stock market panic results in more panic – people selling without really knowing why. It is important for us as long-term investors to take a step back from the irrationality of the market.

Foolish Summary

The markets have experienced a tumultuous time since voting for the US presidential elections started. But many more such events could happen in the future. It’s important to keep in mind: More often than not, once the world gets over the initial shock, it dusts itself off and moves on.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.