18 Nov Is Trump’s election good for the stock market in the long term?

Q. The stock market took a huge leap with Trump’s election, as did Bitcoin. Are these things just momentary, or is it true that Trump policies are just better for the economy? I have my doubts.
— Investor

A. Let’s start off by acknowledging that there’s a whole lot wrapped up into how people think of the election.

Any time there is a change in the presidency of the United States, people make assumptions — some based in fact, some wishful thinking — about what it means for the overall economy and the stock market in particular. Other analysis is more serious and based on facts, trends and history — how the stock market has reacted in the past during times of change.

All that said, we took your question to Jeanne Kane, a certified financial planner with OneDigital in Boonton.

“My name is Jeanne, and it is pronounced Genie. As a Jeanne/Genie, I wish that I could blink and make something happen or be able to predict the future,” she said. “I don’t know, and no one else does either.”

A decisive presidential victory means no drama, Kane said.

“Trump won the electoral college and the popular vote,” she said. “The market’s initial reaction was likely fueled by a swift and decisive election result. This reduced uncertainty in terms of potential future policies.”

Kane said a decisive win provides more certainty about which policies may get implemented.

“Stocks historically rise between a presidential election and the end of the year, but past performance is no guarantee of future performance,” she said, noting that CNBC data shows the three major benchmarks — the S&P 500, Dow Jones Industrial Average, and NASDAQ — closed higher the majority of election years going back to 1980 election.

“The years when it didn’t occur, there was often more going on than just an election,” she said, noting the 2008 financial crisis and the dot-com bust in 2000.

So what happens next?

“With a long-term view, the stock market tends to rise no matter which party is in power,” she said.

Looking to President Elect Donald Trump, Kane said his economic agenda tilts towards a U.S.-business friendly environment that includes tax cuts, deregulation and possible tariffs.

“His recent positive statements regarding cryptocurrency markets have likely boosted investor confidence in digital assets,” she said.

But markets and sustainable market growth depend on more than just market-friendly policy, she said.

“It’s essential to consider both short-term market reactions and long-term economic fundamentals when evaluating the effectiveness of any administration’s policies,” Kane said. “Growth depends on broader economic fundamentals such as productivity, employment and consumer spending.”

She said stocks tend to do better when companies make money.

So what can you do?

“While diversification does not guarantee against loss, we believe you should invest in a diversified portfolio,” she said. “Don’t put all your eggs in one basket.”

Different sectors will do well in different market conditions, she said, and you should stay invested in all different market cycles.

“If you get out of the market, when will you get back in?” she said. “If you time it wrong, you may miss out on gains.”

Kane said you should review your portfolio on a regular basis to ensure that your investment allocation makes sense for where you are in life. It can change over time.

And if you have questions, consider consulting with a financial planner.

Email your questions to .

This story was originally published in November 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.