We expected the initial panic over Trump’s surprise election to create an attractive buying opportunity in global equity markets.  Instead, Trump’s acceptance speech arrested an equity market freefall, and by the time US markets opened the morning after his election, equity prices had fully recovered.  We believe the quick recovery and subsequent moves higher by global equity markets were driven by Trump initially emphasizing policies favourable to investors (e.g. tax reform, deregulation and stimulus) and deemphasizing policies that could impair corporate earnings (e.g. renegotiating NAFTA).

Although our portfolios were denied an opportunity to “buy low”, we nonetheless executed our “Trump Sweep” strategy (see Strategic View dated 11/8/2016 for more on our “Trump Sweep” scenario) of more aggressively positioning portfolios for rising equity markets.  This more aggressive positioning is consistent with our belief that the likely policies of a Trump administration will prove, on balance, favourable for equity markets. However, the Trump presidency could significantly change which asset classes and market sectors lead the market higher.  

David Fuller's view

Here is a PDF of The Strategic View.