Well, it is official, Donald J. Trump is the President of the United States of America. What should investors now expect from the Trump administration? Paul Fain, president of the-much-smaller-Asset Planning Corporation offers some initial prognostications.
“TRUMPONOMICS” – SHOULD WE BE HOPEFUL OR AFRAID?
My bi-partisan answer: Both! Trump has promised a lot – economic growth, lower taxes, fewer regulations and “better” trade agreements, etc. Now the real debates begin.
WHAT SHOULD WE EXPECT WITH HIS FISCAL POLICY AND REGULATIONS?
- Lower Taxes: On the taxes front, Trump has vowed to eliminate the estate tax — or the “death tax” as he prefers to call it — along with shaking up both the income tax brackets and the current income tax deductions. But there’s a catch: Trump’s tax plan would reduce revenue and without corresponding economic growth and revenue the federal budget deficit would almost inevitably skyrocket.
- The future of the DOL Fiduciary Rule – might be open in the air or at least the April 10 compliance date could delayed under President Trump. Hopefully, the customer-first principle that’s embodied in this rule has already taken hold in the marketplace.
HEALTHCARE AND TRADE POLICY ARE VERY SENSITIVE TOPICS…
- Health care appears to be the number one item on the agenda. The GOP has already taken steps to begin the process of rolling back the Affordable Care Act. Access and affordability are still huge issues. The goal is to move forward with improvements in healthcare planning for Americans.
- Trump has talked tough on trade. Change is happening in Britain, Europe, China. Globalization is not going away but it remains to be seen how certain policies might slow the economy.
SO WHAT SHOULD INVESTORS DO NOW?
Our best advice? Basically, do nothing different if you are already broadly diversified – stick to your asset allocation plan and rebalance periodically.
THE BOTTOM LINE?
As my colleague Dr. David Yeske, CFP®, notes – Presidents have less impact on our investments than generally believed. The realities are:
- The usual “noise” just got noisier. For example, Trump tweets could,.
- Drive more volatility in the short run, so,
- Just ignore
- Don’t forget to breathe and Take a break from the news shows.
- Focus instead on the deep regularities:
- Human beings are growth-seeking and resilient, so
- S. and world economy are ultimately resilient and biased to growth, so
- The stock market is biased toward growth over long run.
- Don’t over commit to one version of the future.
- Adopt an attitude of resilience and flexibility – adapt to changes as they occur.
