Tuesday, November 8, 2016

Key Takeaways from US Presidential Elections

What Investors want to know from US Elections

  • Clinton shares many of the Democratic Party's traditional views on spending and taxes, but Trump is generally not as fiscally conservative as a typical Republican
  • Regardless of who wins, Congress will decide which policies become reality - and the vast majority of Congressional seats are in play
  • A Clinton victory could result in a sell-off of pharmaceutical, biotech and possibly financial-services stocks
  • A Trump win could result in a short-term sell-off in stocks, a flight to gold and a rise in the US dollar.

      To understand the impact a Hillary Clinton or Donald Trump win could have on these areas, we must first examine the platforms of the two candidates in a variety of key areas - albeit with the caveat that their platforms have changed over time, particularly Trump's.

    Platform 

     Government spending

     Taxation

     Regulation

     Immigration

     Trade

    • In this "all bets are off" election, investors might want to prepare for more volatility by increasing their focus on tactical asset allocation and sector allocation - and on downside protection.
    • Investors may also want to take a close look at the risk-mitigation and diversification benefits that alternatives provide.
    • It continues to be important to pursue alpha with active management, since beta returns are set to be low and volatile, which could undermine cheap index investments.