Investors should hold steady following election, experts say
After some initial volatility on Wall Street the night that Donald Trump won the presidency the markets stabilized on Wednesday. But given Trump's stand on trade and other economic issues, some people remain nervous about their 401ks and other investments.
Richard Schroeder, Chief Investment Officer for Level Financial Advisors, in Amherst, says typically the markets are volatile 100 days before and after an election. Schroeder points out a recent analysis by Vanguard going back to 1853 found virtually no difference in long-term stock returns under Democrats or Republicans.
"It really, in the end, probably doesn't matter which party controls the White House," Schroeder said.
People tend to place God-like powers in the president. But he says the president is just one person who has to work with many others.
"Politicians do not have the power, except in the short term, to influence the economy. The economy's much bigger than that. And it depends on a lot of other things that are slow to change and that we don't have control over like the aging of the population, migration patterns, new technologies, and all kinds of unexpected things that Donald Trump or Hillary Clinton would have had no control over," Schroeder said.
The best thing to do, Schroeder says, is to stay diversified and don't panic over any one big event.
That advice is echoed by Jeffrey Goldfarb, owner of Goldfarb Financial, in Buffalo. Goldfarb says, in general the markets tend to be rational and investors should not act emotionally. But if people are nervous, he says, it's always best to sell when things are up.
"If somebody realizes, or feels, that there is a lot of uncertainty and they don't have the stomach for it, if things are up, it's always a good time to take a look at that and sell on strength instead of weakness," Goldfarb said.
So far he says the reaction to Trump's election shows that the markets are very unpredictable.