The economy is good right now.
The political scene is challenging.
Politics is causing a pullback today in the market. We might see more of a pullback over the next days or weeks. We believe that this will be temporary.
We talk a lot about behavior and investor returns. We talk a lot about how people get shaken out of markets because they get scared and then miss the next upturn. We are not nervous about the market, especially since there has been a pretty good run-up over the last year, and we do not want to make the mistake of trying to time markets.
Generally, political events do not influence markets in the long run. In the short term, yes, but not in the long run.
Will President Trump be impeached? Who knows?
Will the Russian issue ever go away? We have no clue.
Will Trump change his ways and just keep quiet while getting on with business? Probably not.
Will the Democrats stop trying to fight everything Trump does? That’s doubtful.
The more important questions as far as the stock market is concerned are things like…
Will Alphabet (Google) be the first to come out with a driverless car?
Will Amazon put more retailers out of business?
Will Starbucks solve the problem of speeding up their order line for people who use their app to order before they get to the store?
Will GE make some changes to get back on track?
We believe the stock market questions and the health of the economy are more important than the political questions when it comes to your portfolio. Again, that does not mean that in a short amount of time the markets can’t get hit by politics. It can and it does. But to make long term portfolio decisions based on that is something we believe would be a mistake.
For those in individual stocks, a pullback might mean that we trim or get out of some stocks to put the money into stronger stocks that have pulled back and given us a buying opportunity. For those in mutual funds, there might be some small asset allocation moves. But in general, this will not cause us to be market timers.
If the market pulls back and you have cash, then that would be a good opportunity to put the cash to work. If not, then just stay the course.
As always, we appreciate your confidence in us and if you have any questions, do not hesitate to call.
Steve, Catherine, Scott and the Team at WWM Financial.