Plain Money ideas

Trump-proofing your portfolio

VoteWith Donald Trump installed as president, what should you do with your portfolio? There are two answers:

  1. It’s too late; and
  2. Nothing

Here’s what I mean. Asset markets move very quickly on news. Whatever the latest dust-up is, by the time you hear about it, it’s too late to act on it. Buy more defense stocks because of additional military spending? Fine, but those stocks have already fully incorporated changes in defense policy. Sell technology shares because of immigration policy changes? Too late.

So that brings us to the second answer: do nothing. If you have a well-balanced portfolio, you haven’t placed a bet on any particular sector — and so it doesn’t matter which sectors gain and lose under Trump.

The best investment strategy to deal with political turmoil is (wait for it) buy and hold index funds.