A Retirement Portfolio That’ll Outlast the Trump Presidency
It’s official. “Trumpmerica” is coming.
And as President-elect Donald Trump prepares to take office, investors are readying their retirement portfolios for the next administration.
But this type of thinking is shortsighted…
Sure, your retirement nest egg needs to thrive over the next four years. But it also needs to outlast Trump’s term.
Don’t let political bias or speculation about what his administration might do cloud your judgment. Instead, focus on the fundamentals as you know them today.
Otherwise, you’ll sabotage a big win for your retirement savings.
In other words, don’t join the folks selling stocks that are on Trump’s so-called “hit list.” As I’ll show you, there’s reason to believe these companies will keep marching higher.
History’s Shot in the Arm
Let’s start by looking at gun companies…
Obviously Trump is pro-gun, but when President Obama took office in 2009, the gun industry had a target on its back.
Many investors expected the president’s policies to kill gun sales.
They were blinded by their own political biases about what COULD happen in the future. And they failed to focus on what was happening in the present.
In the two days after the 2008 election, gunmaker Smith & Wesson’s (Nasdaq: SWHC) price fell 18.6%. Sturm Ruger (NYSE: RGR) was down 5.4%.
But the dreaded anti-gun legislation never materialized.
And shareholders who focused on the gun companies’ solid fundamentals – instead of betting on political policies – won big.
Gun sales surged as Americans bought up firearms in anticipation of a ban that never happened. It boosted stock prices. Gunmakers’ profits skyrocketed, too.
Since 2008, Smith & Wesson is up 1,049%, and Sturm Ruger is up 760%.
Both stocks have trounced the performance of the S&P 500, which rose just 119% during the same period.
If you had sold your position right after President Obama was elected, your retirement nest egg would have missed out on what Trump would call “HUUUUGE” gains.
Focus On What You Know, Not What You Don’t Know
It’s too early to know how President-elect Trump’s policies will affect companies in various sectors. But stocks in the industries on his hit list are down.
For example, some companies in the healthcare industry – like hospital operators – and companies in the renewable energy space have seen steep declines in their share prices. Investors dumped shares out of fear that Trump would dismantle the Affordable Care Act and renewable tax credit programs.
Multinational corporations across a wide array of industries have also taken hits due to uncertainty about Trump’s foreign trade platforms.
Will these companies rebound? Is this just a temporary dip? Like I said, it’s too soon to say. We won’t know which (if any) of Trump’s proposed policies will go through until after he actually becomes president.
But we can always examine the fundamentals and dividend health of our investments. So my advice to investors is to do exactly that.
Keep political bias out of your investing. Concentrate on what you know rather than what you don’t know.
Remember, buying stocks with growing sales, healthy cash flow and (preferably) dividends is a good strategy in any political climate.