The Futility Of Predictions: President Trump And The Economy
In the months leading up to the 2016 presidential election, we heard from many of our clients who were concerned about Trump and the economy. Specifically, they inquired into the possible impact of a Trump victory on the economy and the markets.
They wanted to know if there were steps that Prudent Management Associates would take in advance as a hedge against a Trump win or actions we might anticipate after the fact as markets reacted.
Consistent with our 35 year record and investment philosophy, we responded that we did not have the capability to forecast either the outcome of this election or the market’s reaction to it.
While we believe that it is appropriate to reevaluate portfolio allocations and risk appetite in reaction to changes in one’s own circumstances, we do not believe that it is ever wise or effective to speculate on anticipated short-term market reactions to unpredictable events.
For these reasons, we advised clients to sit tight.
And, famously, it turns out that the experts who did make predictions were wildly incorrect. In lieu of predictions, we offered our clients four observations to keep in mind as we proceed into the future of politics and the economy in the US.