NEW HAVEN, Conn. (WTNH)– Around the world financial markets are already reacting to Donald Trump’s victory and so far the news is not good. But what will it mean for your wallet and your retirement account?
It’s kind of like when somebody jumps out and says ‘Boo!’ Your heart races, maybe you need to sit down for a minute. Well, America’s voters just did that to the world’s financial markets.
The initial reaction was that stock futures plummeted. The Dow Jones futures dropped 700 points right away. That leveled out some in the past few hours. Dow futures are down only around 400 points at this point. That’s a little over 2%. Asian markets have already finished their trading day. The Hang Seng in Hong Kong dropped more than 2% and Japan’s Nikkei lost more than 5%. That is huge, and it represents the world’s concerns.
Remember, President-Elect Trump has already said he’s thinking of tossing out trade deals like NAFTA and stopping the Trans Pacific Partnership. A Trump administration could mean a huge change in the way the US deals with the rest of the world.
“Don’t expect too much free trade coming from America, in fact, expect the opposite, protectionism.”
The value of the Mexican Peso has dropped to an all-time low due to Trump’s signature promise to make Mexico pay for a border wall. Global experts liken this to the Brexit vote a few months ago, another voting surprise with wide-ranging economic impact.
Trump is best known as a billionaire businessman, so why are financial markets not happier with his election? Well, he made his money in New York real estate, which is a zero-sum game. There’s only so much of it. Either you own it or someone else does, and whatever you do in New York has no bearing on Chicago. Global financial markets are much more complicated and interconnected.
Most of all, those markets hate uncertainty, and that’s what President-Elect Trump represents.
So what should individual investors do? Not much while the markets are still reacting with 2,3,5% shifts. The stock market has almost tripled in the past 7 and a half years. If you have money in stocks, you had a good run, and there was probably going to be a correction, no matter who won last night. Sit tight and don’t sell anything in a panic.