It’s been a couple weeks since the election, and life goes on. Over the past year, there were a lot of fears and anger about the extreme views of the presidential candidates. Many people urged others to vote for their candidate or even leave the country if they didn’t win. During these tense times, I tried to stay neutral, as I’m a middle child. Trump won the election and now controls the Senate and House. The media’s predictions of a close race were wrong again!
Our investment portfolios have faced challenges, especially with the focus on the ‘Magnificent Seven’ stocks. While other stocks do matter, the numbers show that these were the leaders, and you needed to own them. We take a balanced approach to avoid too much risk. In 2024, the market rewarded those who invested heavily in these tech giants. We compared this to other times in market history, and it felt familiar. Our portfolios saw great gains, and we still believe in these companies. We also believe in quality businesses that didn’t have huge returns. We keep our investments equal and neutral across different economic sectors.
The election and market changes require us to be patient and calm during these challenging times. As Reinhold Niebuhr said, “Grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”
The future leaders in Trump’s administration are still being chosen. The focus areas like taxes, immigration, and international affairs are just starting to be discussed. The next four years will bring actions and reactions to various situations. We don’t know where the markets or economy are headed, but we believe our perspective will help us navigate through it. The debates about who won are over, and we need to focus on what we can control—the present. Our investment decisions will be influenced by the budgets and policies of the next four years. There can be many good ideas, but only time will tell how these challenges are solved. Our portfolios are built with long-term goals in mind, and we believe they are resilient. I hope we can all have more balanced discussions to help everyone succeed. Let’s give each other the space and time to work towards a better country.
~ Steve Davenport, CFA