Investors across the country are variously cheering and mourning the election of Donald Trump as U.S. president. In some cases, they’re pressing their financial planners into double duty as therapists. Or grief counselors.
In San Francisco, where Trump won 9% of the vote, people seem depressed, said Milo Benningfield, a financial adviser based in the Presidio, next to the Golden Gate Bridge.
“The most common remark I’ve heard is, ‘I feel like somebody died,’ ” he said.
“It does seem like a mourning process,” said Jennifer Hatch, managing partner of Christopher Street Financial, 3,000 miles away in New York. Though the financial planning firm has specialized in the lesbian, gay, bisexual and transgender community since 1981, even Hatch wasn’t prepared for the emotional challenge of watching her clients struggle with the Election Day shocker.
“Some people are sort of frozen. Some people are just depressed,” she said. “And some people have gone on with their lives—although you really can’t escape the conversation.”
Overconfidence can hurt investors, but if you’re saving for retirement or other long-term goals, too much fear and caution can be even more dangerous. To get returns, you need to take risks. If you’re paralyzed, or panicking, you’re likely to shut down when you should be looking for opportunities, or to sell at exactly the wrong time.
Never make a major decision after a funeral, the financial advice goes. Grief can warp your judgment in ways you might later regret. And while millions of Americans are ecstatic at Trump’s election, another slice of the country might as well be wearing black.
Differing emotional reactions to the election show up in Gallup polling data. Before Trump won, 16% of Republicans said the economy was getting better, vs. 61% of Democrats. Post-election, Democratic optimism about the economy plunged 15 points, while the share of Republicans saying the economy was improving tripled, to 49%.
So it is that financial advisors find themselves playing political therapists for their progressive clients, coaxing them to stick to investment plans even if they feel the world is ending. Their job is made easier by the stock market. Despite widespread predictions that a Trump victory would send equities into a swoon, the broad S&P 500 index is trading at all-time highs. It’s up 2.7% since Nov. 8, while bond prices have fallen by about the same amount.
Benningfield points to this as further evidence that predicting the stock indexes is a fool’s game. “The worst thing an individual investor can do right now is to try to outguess the market,” he tells his clients.
That includes trying to predict which industries will benefit from Trump’s presidency. Eight years ago, analysts worried that Barack Obama’s presidency would be bad for pharmaceutical stocks. The S&P’s pharma stocks have more than doubled since Obama was elected.