Trump Win Market Slump Over in a Blink

THE WEEK: Morningstar columnist Rodney Hobson predicted that the market slump post Trump election would be brief - but not quite as quick as it turned out to be

Rodney Hobson 11 November, 2016 | 12:01PM
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I suggested in my last column before the US election that any immediate stock market reaction to the result, whichever way it went, would be short-lived, just as the impact of the Brexit vote was. However, I could not have envisaged just how short the blink of an eye could be. The FTSE 100 index dropped 100 points as Donald Trump’s victory was confirmed just before the London opening. Within one hour that loss had been wiped out.

The lesson for small investors is not to get sucked into a panic in the first few minutes of trading. Leave that to the day traders, who thrive on this sort of reaction.

For the longer term, the election at least frees the deadlock caused by having a Democrat president and a Republican Congress. Although President Trump will probably be a lot less wild than Candidate Trump, I am sure there will be some tax cuts and some extra government spending, with the bill to be picked up later. That will help to get the economy moving despite a quarter point rise in interest rates next month.

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About Author

Rodney Hobson

Rodney Hobson  is a columnist for and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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