The following is a guest post Accuplan Benefits Services.
If you have access to the internet, then you know that the news headlines over the last few months (if not longer) have been filled with speculation on what will happen to the economy if candidate A or candidate B is elected. Now that America has its president-elect, we now know a little more about where our economy is headed.
If you are wondering how to profit during the Trump presidency, we have collected some pointers based on what Trump will be doing to change the American economy, and why you might need to play offense this year.
Anticipating Market Reactions to the President-Elect
Regardless how people will react to Mr. Trump’s presidency, it pays to keep in mind the human tendency to follow what is popular. We tend to trust what is immediately apparent and comfortable. When Apple stock is soaring, we pile into it. When Microsoft stock is crashing, we pile out of it. This reactionary approach to investing is bad. Buying high just because others are buying high will leave the investor heavily in debt. The only direction an overly inflated stock can go is down. Selling low just because everyone else is selling low will leave the investor without any profit. The only direction an overly deflated stock could go is up, and you are missing that opportunity. Do not copy this sort of herd behavior. Use cold logic and common sense.
Mr. Trump has taken a low view of unrestricted free trade with countries such as China and Mexico. This is primarily because American workers are unable to compete with the low costs and work ethic of workers in those countries. Trump may be imposing penalties on those countries using the power of the State Department. This could cause prices to rise, and some form of political conflict to occur. Make sure that you are buying what you want from these countries while tariffs are still low.
Deregulation of Mining and Oil Industry
Trump will be ending the Obama administration’s tough regulations on shale and coal mining. This should lower the price of oil, but it could have detrimental effects on the environment. If you hold stock that is heavily denominated in oil, you may want to realize the supply will likely be increasing, and the value of it decreasing during the Trump administration. The time to sell this sort of stock is when the price is still high.
How to Brace for the Federal Interest Rate Increase
High Federal interest rates basically means that lending out U.S. dollars will be more profitable. Borrowing U.S. dollars will be more expensive. If you are a lender or a debt free investor, prepare to smile during the Trump presidency. Your returns on investment, if denominated in U.S. currency, should be higher. If you are a debtor, as many Americans are, now is the time to eliminate your debt. Higher interest rates will negatively affect your mortgage, your car loan, and your credit card fees. It will mean more expense to your monthly bills.
These are just some of the things that you need to be thinking. Remember that the success or failure of your investments is your responsibility. It is easy just to hand over your hard-earned money to a faceless expert. It is hard to make sure that the faceless expert knows what they are doing. The 2008 Recession showed that many so-called experts really do not have a clue what they are doing. Take responsibility for your finances, and watch them grow. There are many opportunities to profit during any presidency. You just have to be willing to eliminate debt, brace for higher prices on Chinese origin goods, and start lending out your money. Be the person who helps others, rather than the person who is helped.
For more information on investing, self-directed IRAs, or gold IRAs, read more about Accuplan Benefits Services.