(earlier this month)
Here's how you can avoid getting burned in the election furnace.
Elections have unsettled investors of late. But even the election of Donald Trump is being dwarfed by the environment in which he was elected – a very mature economic cycle and a very over-valued stock market (more here) – overwhelming debt and ugly demographics – and the biting march of technology.
The reality is that most politicians have little impact on entrenched long term trends.
Nonetheless, most investors can be swayed by a good headline. If they are susceptible to a story they don’t have a robust process in place for regularly and rigorously reviewing their portfolios.
Instead of trying to time investments around the ebbs and flows of an impending election, investors should make sure that the foundations of their investment process are robust.
The silver lining may be that the upcoming election might serve to encourage investors to do a spring clean. This is a good opportunity to clean out mediocre funds and make sure that their investment process is robust.
It’s also an opportunity to do a bit of profit-taking. If you made 20% or so over the last year, taking 10% off the table is not a bad idea, election or no election.
The best way to profit from the upcoming general election? Ignore the headlines and focus on your investment process.
ACTION FOR INVESTORS
- Don't let the headlines distract you
- Follow your investment process...
- If you don't have one, now's a good time to set one up