It’s been quite an interesting ride since election day, hasn’t it? First, who would have ever thought that Trump would actually get elected? Nobody! And, taking it a step further, who would have ever thought that the stock market would actually go up each day since – especially after futures were down 900 points when the market realized Trump was going to win? Nobody! An almost unimaginable sequence of events, but, oh so fascinating! Yet another instance and a huge lesson reinforced in all of this once again for investors. When you attempt to guess what might happen in the investment world, in response to human emotions, you will usually guess wrong and could very well make matters worse.
So, if the stock market is up, why hasn’t your portfolio gone up? Notice on the chart below, the performance of US stocks (green line up +2.82%) and US bonds (blue line down (-)2.18%) over the past five days. The stock market thinks that Trump is going to be good for business. And, the bond market thinks the same thing! The bond market is now surely anticipating an interest rate hike in December. Remember, as yields go up, bonds go down in value. In time we will find equilibrium between the two, but, for now things are probably a little bit extreme.
So, rather than react to all of this craziness, let’s appreciate that our diversified portfolios are working as intended and relish our country’s amazing election system. Truly anything is possible in America, like the outcome or not!