The Motley Fool

3 Quick Tips for Investing in the Era of President Trump

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.

With that in mind, here’re three tips which could help you along the way:

1. We can’t predict the next four years – click here

2. Time is your friend, impulse is your enemy – click here

3. Sell when you want to, not when you have to

Shares of large technology companies has been hit in the wake of Trump’s win. And if you are thinking of joining the sell-off, do heed hedge fund manager Seth Klarman’s words:

In Klarman’s words, when it comes selling – the trick to sell when we want to rather than when we have to. Selling a stock should also be done for good reasons. Let’s take look at what are some possible reasons to sell:

  1. When there are better opportunities
  2. When the underlying business changes in a big way
  3. Valuation that exceeds that business potential
  4. The original investment thesis is wrong

For instance, if you have the view that M1 Ltd (SGX: B2F) might have a hard time dealing with the entry of a fourth telco – a viable business concern – that could be the kind business change that could warrant a sell. And if you have come to that conclusion, this would a sell that is done, as Klarman would put it, because you want to sell.

This is not done because you have to sell in reaction to a market sell-off. Neither it is done because you need to sell out of fear of what will happen next.  

In essence, as investors, we might want to keep our eyes on the business behind the ticker in deciding whether to buy, hold or sell. 

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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.