Last week, Donald Trump was elected as the President of United States.
The result was a surprise as polls had favoured Hillary Clinton for the win. As the vote count progressed, markets around the world reacted with volatility. And as Trump emerged as the President-elect, the financial media switched gears to defining what stocks would benefit from his economic policies.
For the common investor, there might be questions over what a Trump presidency means for investing.
What NOT to do
We might want to start with what we shouldn’t do. For that, I found a quote which might be apt for this situation:
"No one can see ahead three years, let alone five or 10." — T. Rowe Price
— The Motley Fool (@themotleyfool) November 4, 2016
Thomas Rowe Price (1898-1983) may not be around to to witness the Trump presidency, but his words might stand the test of time. Right now, it is tempting to forecast what will happen for the years ahead. But as my fellow Fool Morgan Housel once wrote (in 2012), US Presidential investing themes – like what we see right now – might not always play out the way we think it will.
Morgan points out that victory for Barack Obama in 2008 was projected to be good for green energy stocks. As it turns out, solar energy stocks actually took a heavy beating during U.S. President Obama’s presidency.
Important, but one among many
U.S. Presidents may wield some influence in the global economy, but it is also one factor among many that can affect businesses. For instance, it is unlikely that Obama has had much influence over the direction of oil prices. Oil prices have traded as high as US$110 per barrel to below US$40 per barrel during his tenure.
And then, some Singapore business might not be connected at all.
For instance, it is unlikely that Trump’s policies will affect how many Curry-O’s that Old Chang Kee Ltd (SGX: 5ML) sells. Or whether Singapore shoppers will continue to flock Sheng Siong Group Ltd’s (SGX: OV8) stores. In short, there are businesses that might have nothing to do with the U.S. President elections.
As investors, we need to keep our eyes on the business behind the ticker.
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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 contributor Chin Hui Leong doesn’t own shares in any companies mentioned.