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Trump Is On A Mission To Deregulate. Opportunity or Disaster?

There’s a good chance that you hate Donald Trump. That’s fine. This article isn’t about his personality, his hair, his remarks about women, his travel ban, or any of that. This article is about what his presidency means for the stock market. As Financial Advisors, it is our job and instinct to look at how politics (and everything else) affect the stock market. Love him or hate him, the stock market will likely soar as a result of him winning the election. We have already seen it in the last month or so – all of those gorgeous green arrows showing stocks rising in prices, portfolios growing, and the undeniable effect this has had on many investors’ attitudes. So, for just a moment, leave your hatred for him behind and focus on the positive. If you have money invested  with the objective of long term growth and exposure to the sectors of the market that are most affected by deregulation, you could be making money. On the other hand, if you are appalled my the very notion of Trump being in charge and the fear of him destroying our economy keeps you up at night, there are plenty of conservative alternatives.

What is deregulation? Deregulation is accomplished by removing laws that hinder a company’s ability to do business. Why do some people hate it and why do others love it? Those who are against deregulation are concerned for the safety of consumers and that fraud will take over and everyone will be screwed. The proponents of deregulation believe that the free market will naturally set fair prices, often resulting in lower prices, and that innovation will thrive. What both sides typically agree on is that regardless of social and environmental concerns, businesses grow more easily when they have less red tape standing in their way. That means they hire more people, spend more money, and pump funds into the economy, likely resulting in money in your pocket as an investor. Stockholders share in the profits of expanding companies. That is why, no matter how you may feel about President Trump, you can find some relief in the prospect of higher returns on your investments.

If your time horizon is long enough and you can tolerate some risk, the stock market is a great place to be right now. Although it has just reached an all time high, there is still unlimited potential for growth. Of course, not all stocks will grow and there is always risk associated with investing, but with some proper timing and strategizing you can make money in the stock market. Usually, we wait for the market to drop before we dump money in, but what if the market keeps going up and we miss the boat? Introducing Dollar Cost Averaging: Invest over time, by periodically investing the same amount of money each month over the course of a year (or years). This means you will buy more shares when prices are low, and less shares when prices are high, resulting in a lower overall cost basis and a good foundation for growth potential.

Trump’s administration will likely deregulate sectors like pharmaceuticals and healthcare, financial and banking, and oil and gas. Even if you have fears surrounding the long term effect this deregulation will have on the environment surrounding each, there is a good chance the companies involved will be making more money, meaning you could be too. We may not be able to change the actions President Trump takes, but we might as well  appreciate the positives that may come along with any negatives.

These blogs are independently created publication which is meant for the general illustration and/or informational purposes only. Although this information has been gathered from sources believed to be reliable, it cannot be guaranteed. The views expressed are not necessarily the opinion of SagePoint Financial Inc., and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. All Investing involves risk including the potential loss of principal. No investment strategy including buy and hold and diversification can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary and therefore should only be relied upon when coordinated with individual professional advice. This information is not to be taken as investment advice or a guarantee of future results.

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