The e-mail came in Friday before the election. My investor was very concerned and wanted to liquidate most of his equities and “sit on the sidelines for a few weeks.” And when the “dust settles” reinvest accordingly. I’m assuming this investor had a hunch Trump would win, and thought that it would cause his portfolio to crash. A part of me understood. In fact when I attended the Pershing Insite conference in Orlando this year, one of the very informed economist speakers told us that a Hillary win was already priced in and Trump would have an adverse effect. But I still knew it was a bad move because economics and politics are too complex to predict short-term outcomes, no less correlation between the two. But the investor gave the orders, and I had to oblige and sell.
So as we know, he was right in Trump winning but here’s what happened to the markets as represented by the Dow:
Election morning we are at 18,288, five days later we hit an all time high of 18,921. So, as measured by the Dow, he misses out on close to half of the entire year’s growth, reinforcing my understanding that we are better off creating and monitoring a financial plan rather than trying to predict short-term market moves.