The next couple of months will be full of ups and downs for investors as Donald Trump waits in the wings to become US President. That’s the view of one of the region’s top IFAs who is urging investors to hold on tight, but believes things will settle in January next year when Trump’s policies become clear.
Stephen Baxter, Joint Managing Partner at Robertson Baxter, believes that whilst the markets have rallied since Trump beat Hilary Clinton to the Whitehouse, the inconsistent nature of the President-elect means that the next couple of months are incredibly hard to predict.
“Until Trump takes office and we know what his policies are, it’s very difficult to make any accurate predictions,” said Stephen. “Much of his campaign rhetoric was anti free-trade, but this is coming from a renowned capitalist.
“He’s already back-tracking on much of what he said during his election campaign, so until he’s in the Oval Office full time, we’ll experience a lot of market volatility in the short to medium term and that won’t subside until the end of January at the earliest,” added Stephen, whose firm handles financial planning for high net worth individuals, charities and trusts across the region.
“If the dollar strengthens, that will have a negative impact on inflation around the world.Â However, an increasing deficit and US inflation may result in a weaker dollar in the longer term which will affect commodities as most are priced in dollars.
“The introduction of tariffs will affect imports and exports which in turn could affect the profitability of global companies.”
And the result of Trump winning combined with our unexpected Brexit is likely to have a more direct effect across Europe. “Italy, France and Germany all have elections in the coming months and the rise of anti-establishment, popular nationalism movements, means populist uprising parties in these countries are probably feeling encouraged,” he added.
“It’s clear that whether you’re investing for security or growth, there are benefits in having a well-diversified portfolio. It pays to have your assets split over security and risk.
“We’re in for a bumpy ride, so I suggest investors just hang on and seek advice from portfolio or fund managers and advisers who will be aware of the issues and will take positions within portfolios in line with their views on the long term outcomes, with a view to minimising volatility and downside risk, whilst accessing maximum growth potential.”