Clinton vs. Trump: A Wake-Up Call for All Investors
This crazy election has been filled with shocking twists and turns, but if Mom and Pop investors have learned anything it is to make sure you know what you can stomach when it comes to your investments.
“If people are nervous, we are asking them ‘why are they nervous’? What it really came down to was people hadn’t looked at their portfolio,” John Sweeney, executive vice president of Retirement and Investing Strategies for Personal Investing at Fidelity, tells FOXBusiness.com.
Still Sweeney notes that group is a small one. Just 15% of clients surveyed by the firm plan to make portfolio changes or already have as a consequence of the election. A similar trend is under way at Charles Schwab (NASDAQ:SCHW). In a separate online survey of affluent investors ($250K in assets), 77% said they don’t plan to make changes ahead of the election and 85% are confident their investments can withstand any post-election volatility.
While cooler heads may prevail, the uncertainty caused by the election is a reminder for main street investors to be sure to understand how their portfolio is tilted. For example, if 90% is in stocks you are more exposed to risk vs. a heavy-weighted fixed income mix.
While the Clinton vs. Trump race has been one of the most heated and mean-spirited on record, investors have dealt with many other events in recent months that have amped up market volatility and uncertainty. Last June the surprise ‘Brexit’ vote, in which the U.K. voted to exit the European Union, sent global stocks spiraling. In the summer of 2015 concerns about China sent the Dow Jones Industrial Average plummeting more than 1,000 points mid-morning on August 24, before recovering some of those losses.
This election will be "Brexit times 10"...
And there will be other events down the road. Last week Trumped quipped that this election will be “Brexit times 10 …”
Speculation aside, Sweeny recommends investors look at their portfolios “at least once a year” to determine if a rebalance is due. For those investors who own a Target Date fund, perhaps in their company 401(K) plan, it will rebalance automatically.
74% of investors surveyed by Fidelity believe the stock market will be impacted depending on which party controls the White House. Stocks appeared to confirm this belief as the S&P 500 rallied 2% on Monday, after FBI Director James Comey said he would not pursue charges against Hillary Clinton upon reviewing a new set of emails related to the re-opened investigation of her home server.
This news reversed a nine-day losing streak for the S&P 500, the worst since 1980, while Dow Jones Industrial Average was up 2.08%, its best day before an Election Day with a presidential election since 1932. The last time investors saw a bigger bounce for the Dow, 3.48%, was on November 7, 1932, the day before FDR's first presidential election, according to our partners at the WSJ Market Data Group.
Both may indicate which candidate Wall Street wants to see in the White House.
Suzanne O’Halloran is Managing Editor of FOXBusiness.com and a graduate of Boston College. Follow her on @suzohalloran.