An
acquaintance of mine was a state legislator representing a district
within California. When “Then Movie Star” Arnold Schwarzenegger was
running for Governor of California, the legislator said to me, “...if
Schwarzenegger gets elected, he won't get anything done. We won't let
him get anything done.”
His point was, Schwarzenegger was an outsider and an opportunist,
with little to no experience in the public sector. His performance in
office was ultimately lackluster. To attempt to get things done,
Schwarzenegger often went to the public through referendum; utilizing
his star power to some effect. But, all in all, his governorship was
underwhelming.
Now with Trump, there are similar circumstances. He was elected in
the shadow of Brexit with less than half of the popular vote. His base,
to a large extent was angry disaffected Americans looking for a real
change of the status quo. If you want insight into the American psyche
of why Trump got elected read “Hillbilly Elegy Book by J. D. Vance.”
The “take away” here is while Trump may have some good ideas and
policies, it will be difficult for him to implement them. Therefore, the
estimates of US economic growth of about 3% GDP may be difficult to
accomplish. The equity markets seemed to have “baked in” the GDP growth
into its valuations. Some technical analysts estimate the markets may be
in for a 10-15% downward correction, while other fundamental experts
such as Jeremy Siegel, Professor of Finance at the Wharton School of the
University of Pennsylvania is sanguine about stock market growth.
My sense is, its unknowable; though I'm suspect of unbridled growth. So what do we do?
First, expect market volatility. Second, double down on a
diversified, age appropriate portfolio. With a thoughtfully designed
portfolio with an appropriate time horizon it builds a strong foundation
to glean the benefits over time. Third, possibly sit on some cash to
take advantage of an inevitable correction. Fourth, relax.
US investors suffer with far reaching taxation and onerous laws for
moving money around the world. While we can't change the rules, we can
help you optimize your situation and can guide to invest in new US climate. Mark James and I at the San Francisco
office of the ABG group are at your service to help.
Scott Schwartz MBA, is Certified Investment Management Analyst, from
the Wharton School of Business; and the Investment Management
Consultants Association.
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