After all the predictions that the stock market would tank on a Donald Trumppresidential victory, the market did none of that Wednesday. Instead the Dow Jones Industrial Average climbed almost 300 points.
Perhaps the pre-election doom and gloom stock market blabber was never about investing, but rather about political spin. Or maybe level heads prevailed after learning last summer that knee-jerk stock selling after a major vote — in that case the Brexit vote of June 23 — doesn't turn out well. After the British vote to leave the European Union, the economy didn't plunge into ruin. Instead, politicians started talking about paths more moderate than pre-voting rhetoric would have suggested. European stocks are down 7 percent this year, which is disappointing for investors but not a disaster. And the Dow is up about 7 percent for the year.
Wednesday in the U.S. there was no sign of the 15 percent stock market drop some predicted upon a Trump win, and Wall Street's talkers in the first hours after the surprise Trump election now are chatting up the positives his presidency could provide to the economy and investors.[Trump and the stock market]An image of President-elect Donald Trump appears on a television screen on the floor of the New York Stock Exchange on Nov. 9, 2016. (Richard Drew / AP)The particulars will evolve, possibly with the market quaking at times upon new Trump rhetoric on erecting barriers to trade and relationships with foreign governments. But now analysts are taking a wait-and-see approach.
Here are four things investors need to know in the wake of Trump's upset victory:
Expect occasional market volatility: Analysts now think the markets are more likely to take their cues from the economy and corporate profits than from political rhetoric, although there could be short-term blips of volatility based on controversial or outrageous comments by Trump.
The expectation is that the market will soon start to behave as it typically does after shocking events have passed. The profits companies generate, and signs of a growing economy, will be key. But there could be a few days of adjustment in the stock market before that routine course of investing kicks in. That's because professional stock traders bought, sold and borrowed stocks during the last few days based on what they thought a Hillary Clinton win would mean for particular companies and sectors in the economy. Those moves were based on faulty assumptions, so market volatility is likely as the traders switch investments based on the new reality.
The adjustment could send misleading signals on what stocks are desirable, so now may be the time for individual investors to sit still rather buying or selling.
ABOUT
Dynamic Wealth Research was founded on the principle the world is changing at an ever-increasing pace. The greatest profit opportunities an investor will ever find are from massive, sweeping changes. Dynamic Wealth Research analyzes and closely follows these changes, keeps its readers on the leading edge of them, and shows you how to be best positioned these anxious, interesting, and ultimately profitable times.
