What does Trump’s Inauguration Mean for Your Portfolio?

What does Trump’s Inauguration Mean for Your Portfolio?

Macro
Charu Chanana

Chief Investment Strategist

Key points:


  1. Volatility Is Inevitable. Don’t Panic. Market swings are common during times of political change, such as Trump's inauguration. Investors should evaluate their portfolios, assess their risk exposure, and maintain a balanced mix of investments to weather both market rallies and downturns.

  2. Watch Sectors Likely to Move. Trump's proposed policies could benefit certain sectors like infrastructure, industrials, and financials, while others like healthcare and technology might face challenges. Investors should assess opportunities in sectors that align with their long-term strategy.

  3. Think Beyond the Headlines. Markets don't always respond predictably to news about trade wars, tax policies, or deregulation. Investors should focus on fundamentals, invest in strong companies, use dollar-cost averaging, and keep cash reserves to take advantage of opportunities during market dips.


The start of a new presidency often brings fresh energy – and uncertainty – to the financial markets. With Donald Trump’s inauguration, investors are bracing for significant policy shifts. This could mean changes in taxes, spending, and trade agreements – all factors that markets may already be reacting to or will soon begin pricing in.

For investors, it’s natural to feel both excited about potential opportunities and apprehensive about the unknown. The key to navigating these waters? Focus on your long-term goals while staying flexible enough to take advantage of emerging opportunities. Let’s dive into how you can position your portfolio as this new chapter unfolds.

Volatility Is Inevitable. Don’t Panic.

Market swings are common during times of political change, and this inauguration is no exception. Investors may be pricing in uncertainty around Trump’s proposed policies, such as his stance on trade, infrastructure spending, and tax reforms.

While the news cycle can feel like a rollercoaster, volatility isn’t a reason to sell everything. Instead, it’s a chance to evaluate your portfolio. Start by asking:

  • Am I comfortable with the level of risk in my portfolio?
  • Do I have a mix of investments that can weather both market rallies and downturns?

If you're not sure how to assess your risk exposure, you should check your asset allocation:

  • If you're heavily invested in stocks, your portfolio may experience larger swings.
  • A balance of stocks, bonds, and cash can help reduce risk while providing growth potential.

Watch Sectors Likely to Move

Trump’s proposed policies could create tailwinds for some sectors while putting pressure on others. Here’s a high-level view of what to watch:

  • Infrastructure and Industrials: Large-scale spending on roads, bridges, and other infrastructure could boost companies in construction, materials, and heavy equipment. Look into ETFs that focus on industrials or infrastructure.
  • Financials: Banks and financial institutions might benefit from deregulation and high interest rates. Consider funds that provide exposure to this sector.
  • Defensive Sectors: Utilities and consumer staples often provide stability during volatile times. These may be good options if you’re looking to play it safe.
  • Healthcare and Technology: These sectors could face challenges, especially if policies around drug pricing or tech regulation come under scrutiny.

Rather than chasing trends, use this as a guide to assess opportunities in sectors that align with your long-term strategy.


Think Beyond the Headlines

Headlines about trade wars, tax policies, or deregulation might grab your attention, but markets don't always respond predictably. For example, a tweet about tariffs might send stocks tumbling one day, only for them to recover after more clarity emerges.

  • To avoid being swayed by short-term noise, focus on fundamentals:
  • Invest in Strong Companies: Businesses with steady earnings and a history of resilience are more likely to weather political and market volatility.
  • Use Dollar-Cost Averaging (DCA): By investing a set amount regularly, you can reduce the impact of market fluctuations on your portfolio.
  • Keep Cash Handy: A cash reserve allows you to take advantage of opportunities when markets dip unexpectedly.

Build a Safety Net for Peace of Mind

Even seasoned investors feel the jitters during periods of uncertainty. That’s why it’s essential to have a safety net in place:

  • Bonds and Dividends: Adding bonds or dividend-paying stocks can provide stability and income during turbulent times. Consider a broad-based bond ETF for instant diversification.
  • Gold and Other Hedges: Precious metals like gold often act as a hedge against market downturns or inflation.
  • Regular Rebalancing: Check your portfolio at least twice a year to ensure your asset allocation aligns with your goals.

Final Thoughts

Trump’s inauguration marks the beginning of a new chapter for markets, but the core principles of smart investing haven’t changed. By staying diversified, focusing on fundamentals, and keeping a long-term perspective, you can turn uncertainty into opportunity.

No one can predict the future, but with a steady hand and a clear plan, one can be ready to face whatever the market throws their way.

Quarterly Outlook

01 /

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Chief Macro Strategist

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Chief Macro Strategist

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...

Disclaimer

The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.