It’s 10:11pm MT on election night and it would appear that despite nearly universal predictions to the contrary, Donald Trump is about to be elected to be the 45th President of the United States. Markets are in near freefall overnight, and the last figure I saw was DJIA futures off over 800 points, more than a 5% decline.
Of course what we’re going to hear non-stop for the next few days is ongoing comparisons to the Brexit vote. Unexpected, surprising, it rocked financial markets. And then what happened? Things calmed down, because that’s what things do over time.
I’ll go out and say I don’t think we have much of an idea what a Donald Trump presidency looks like. Predictions around him have failed again and again, so I won’t try. Here’s what I do know. Forever people have put too much credit and too much blame at the feet of the President when it comes to the economy. People who voted against Barack Obama in 2008 are loathe to admit that the stock market is up over 10% annualized during his presidency. Correlation isn’t causation, and the world economy is a complex place. Too complex for any single person to wield dramatic power.
I don’t know what happens next, so what I’m going to do instead is quote myself. In 2012, I wrote the following on election day.
Face it: the world is an increasingly complicated, intertwined place, and the same is true of the global economy. The running joke is that economists exist to make meteorologists look like geniuses. These economists are SMART. They have Ph.D.s, access to the most robust data you can find, brilliant experience and insight. And even they can’t predict, with any certainty, the next jobs number, let alone the direction of markets, the impact of a natural disaster, or what is really going on in China.
These economists fail not because they lack information, but because there is simply too much of it. There are infinite variables that affect the strength, direction and productivity of the global economy. One man or woman, even the leader of the free world, cannot flip a switch to set alight or destroy the global economy – there are simply too many other inputs to the equation.
So instead of fretting over results to be announced tonight, successful investors will recognize the long-term nature of success, and focus on reducing those factors that hinder their growing wealth: costs and taxes. All else is noise.
Go back to your lives, focus on what matters AND is under your control. Markets go up and down. Are you going to be a successful investor while they do?
For me, I’m going to bed. When I get up in the morning my investment strategy will be the same as it was 4 hours ago when the New York Times said there was an 80% chance our next president would be Hillary Clinton.