Markets in Motion: Smart Investing in Trump’s New Era

The U.S. market is again in a time of transition, influenced by aggressive trade policies, inflationary pressures, and global uncertainty. If you’re an investor, you’re probably asking yourself: What’s next? Should I rebalance my portfolio? Is this the time to buy, hold, or sell?

The reality is, market volatility is nothing new. It’s what you do during it that truly matters. Though headlines might scream policy changes and economic woes, the secret to long-term success doesn’t change: pay attention to corporate earnings and economic fundamentals. These are the real engines of market resiliency and growth. Let’s dissect.

Trade Policies & Market Volatility: Do You Need To Worry?

With the return of Trump comes the promise of tariffs and ‘America First’ policies which will most likely worsen the current economic situation. During the previous Trump presidency, he implemented a strict policy on China along with corporate tax cuts, which changed America’s economy heavily. In his forward motion, investors should prepare for new tariffs and trade wars that could affect supply chains around the world, alongside important industries such as technology, agriculture, manufacturing, and technology.

While this can cause short-term market instability, history has shown that markets do adapt. Yes, trade-intensive industries such as manufacturing and technology might get hit. But resilient companies change. They divert supply chains, renegotiate favorable terms, and figure out ways to stay profitable. As an investor, don’t get spooked by trade news in the headlines. Look for companies with good earnings, healthy balance sheets, and a history of staying strong.

Inflation & Interest Rates: What It Means for Your Portfolio

Inflation has been a top concern for investors, and rightly so. Increased inflation eats away at purchasing power, affects consumer spending, and affects interest rates. But here’s the catch: intelligent investors don’t fear inflation; they prepare for it.

In the past, equities have proven to be an excellent hedge against inflation. Why? Because robust companies can price in costs to consumers, keep profitability intact, and still expand. Consider groups that historically thrive in inflationary environments, such as energy, commodities, healthcare, technology, and financials.

On the fixed-income side, higher interest rates can cause bonds to lose some appeal, but that does not mean to not invest in them at all. Shorter bonds and inflation-adjusted securities (TIPS) can round out your portfolio.

Geopolitical Uncertainty: A Market Reality

Unknowns are involved in investing. Whether political upheavals, international conflict, or economic chaos, markets have experienced tumult and bounced back before.

Instead of attempting to time the market based on political events (something almost impossible to do), hold firm on your long-term strategy. Diversification is still your best strategy. A combination of equities, fixed income, and alternatives can help to cushion market fluctuations.

The Bottom Line: Hold Firm on the Fundamentals

Amidst all the commotion, one thing holds true: long-term market performance is driven by corporate profits and economic fundamentals. Businesses that have a consistent stream of revenue, keep costs under control, and innovate will keep expanding, come what may in terms of politics.

Factors such as GDP growth, employment rates, consumer confidence, and business investments should be at the core of any investment strategy. A strong labor market and steady consumer demand typically bode well for economic stability, even in times of political uncertainty.

So, what do you do as an investor?

• Stay updated, but do not panic over short-term news.
• Invest in good businesses with good earnings prospects.
• Diversify your portfolio across different sectors, asset classes, and geographical markets. Exposure to international markets can provide additional balance.

The market may be shifting, but with a steady approach, you’ll be well-positioned to navigate this new era and seize opportunities along the way.

Disclaimer:‍‍‍‍‍‍ Investment carries certain risks. You should not just rely on results as an indication of your financial needs. You should understand and familiarise yourself with any investment and the associated risks before investing. You are also recommended to seek professional advice before making any decision to buy, sell or hold any investment or insurance product. The views and thoughts expressed in the post belong solely to us, and not to Manulife Financial Advisers Pte Ltd, or any other group of individuals.