The U.S. stock market has jumped since the November 8th election. Many investors are asking if now is a good time to “take profits” and sit on the side lines to wait to see what happens. But this strategy is a form of market timing. If there is one thing we have learned from 2016 is that it is exceptionally difficult to time the market. Instead of market timing, let’s identify and track the 4 initiatives the U.S. stock market is speculating will be successfully accomplished early in the Trump administration.
If Trump administration successfully accomplishes the 4 initiatives, then the stock market has speculated correctly and could trend to higher and higher levels over the next 4 to 5 years. However, if his administration is unsuccessful in accomplishing the 4 initiatives, then stock market investors may find themselves disappointed with a correction sending shares values back down to levels witnessed prior to the November 8th election.
The outcome of the 4 initiatives have a substantial impact on the factors in the “Heat Map”
The 4 Trump administration initiatives upon which the stock market is speculating are:
- Tax cuts and tax reforms benefiting most individuals and businesses.
- Infrastructure spending of up to $1 Trillion over the upcoming 7 to 10 years.
- Affordable Care Act amendment, reform or reorganization.
- Roll back of government regulations and Executive Orders considered to be difficult for businesses.
As the action happens in Washington on these 4 initiatives, don’t be surprised if the beginning of 2017 is wilder than the end of 2016.
We will report in future issues on the progress on each initiative.