Unlike some of my more sanguine friends who think the average person won’t be much affected by whatever Trump does, and who note that the market is up since the election, I’m extremely concerned about the financial future. Any one of a number of impulsive things that Trump could do — and has promised to do, like summarily repeal the Affordable Care Act — could throw the financial markets into complete chaos. Ditto a trade war, or a confrontation with China over those obscure islands in the South China Sea, or a face-off with North Korea, or a full-blown bromance with Putin at the expense of the European alliance.
I no longer manage my own funds, but have delegated that to younger, smarter people who do it full time. My financial advisor’s take is that money management models that have worked for years based on assumptions of predictability and stability in U.S. fiscal policy are simply not constructed to withstand the shocks of a Trump administration. That’s not a comment about any one company’s model — it’s a generic observation on the money management industry. Remember that Trump built his business by blowing through financial reality and driving his companies into bankruptcy, then walking away leaving his creditors and investors holding the bag. Now, the American people are in the role of creditors and investors. It’s the model he knows and has worked for him — but the presidency of the United States is very different. There’s no walking away, and we the people will be left with wildly gyrating markets and a struggling economy. The advisors he’s picked, like Wilbur Ross and Steve Mnuchin, have made their money through vulture investing. They’re of the same stripe that Trump is, and it doesn’t bode well.
People whose income comes from pensions rather than portfolios may feel insulated, but shouldn’t. Pension dollars come from portfolios, and if the market tanks and the dollars aren’t there, the pension administrator is going to have a much harder time finding the money to send out those monthly checks.
If you don’t have an emergency fund in cash, something you can draw from if things really go south, you should. And if you haven’t talked with your financial advisor about the next 12-18 months, do so now. If you don’t have an advisor, find one. This is going to be one rocky road.