Trump-proofing your portfolio

VoteNow that Donald Trump has been elected president, what should you do with your portfolio? There are two answers:

  1. It’s too late; and
  2. Nothing

Here’s what I mean. Asset markets move very quickly on news. Any obvious Trump-proofing measures that can be taken have been taken — in fact, that happened before mid-morning on the day after the election. Buy more defense stocks because of additional military spending? Fine, but those stocks have already fully incorporated the election. Sell technology shares because of immigration policy changes? Too late.

So that brings us to the second answer: do nothing. If you have a well-balanced portfolio, you haven’t placed a bet on any particular sector — and so it doesn’t matter which sectors gain and lose under Trump.

The best investment strategy to deal with unexpected electoral news is (wait for it) buy and hold index funds.