A Look Back and a Peep Ahead as the Guard Changes The end of the Obama era and the start of the Trump reign have one thing in common – investors are in a bit of trepidation.
2017
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For those carrying out conventional or online stock trading, a political change of guard does present some uncertainties. But the strength and potential of a mature economy should not be underestimated, as this stock market expert claims. Why You Don’t Need to Be Overly concerned about the Change in Leadership As President Donald Trump takes over, there is trepidation for some but for others such as Jim Cramer there is no reason for such feelings of unpredictability. Wall Street did fall as the day of Trump’s inauguration came, though the positively high Q4 earning reports of some major companies had sprinkled hope all through the stock market. Political views and considerations aside, this is the time to objectively view how the markets fared during the Obama era. This will give us vital lessons to learn for the Trump era. Looking Back at the Obama Era Winding back to when Barack Obama took the reins 8 years back, there were predictions of doom centered on his apparent anti-business views and elements of what people thought was socialism. People predicted the economy would head to a total collapse, but it was far from what actually happened. There was panic, and people began preparing for disaster. But the reality was quite different. These eight years have witnessed tremendous recovery. It reveals the resilience of the US economy. Of course the recovery could have been faster but it certainly wasn’t doomsday. The following chart of the S&P 500 all through the Obama years perfectly illustrates this, as provided the aforementioned stock market expert.
It’s a lesson to learn that the fears propagated now with Trump taking over need not materialize and the resilient markets will take up the charge. Some Sore Points It’s true that the stock market is not always an accurate representation of the economy. These eight years of Obama’s Presidency did see disruption and massive volatility, particularly the oil price collapse after crossing more than $100. The coal mining sector
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continues to decline, which Trump is sure to invigorate thanks to his desire for conventional fuel sources and scorn for the climate change concept. To recover the market, the Federal Reserve introduced the policy of near zero rate of interest. This did help reinvigorate the market but it increased the risk for people who were saving money and earning income through retirement funds. The recovery too has not been felt on a greater scale. Steady Growth despite the Doomsday Prophecies Overall, though, the last eight years were those of steady growth. It is a lesson that we should not always make our investing decisions on political considerations of the Oval Office or the Congress. The economy has a life of its own. In the next four years of Trump’s reign there could be an economic downturn, but if that happens, stock traders must realize that it is because of the US economy, as indeed all mature economies, being of a cyclical nature. The economy will improve from such downturns. Far from panicking, those dips usually present great buying opportunities to be exploited.
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