{"id":826,"date":"2025-01-28T00:15:30","date_gmt":"2025-01-28T00:15:30","guid":{"rendered":"https:\/\/finzexpert.com\/blog\/how-to-invest-during-a-presidency-with-a-deep-devotion-to-profits\/"},"modified":"2025-01-28T00:15:30","modified_gmt":"2025-01-28T00:15:30","slug":"how-to-invest-during-a-presidency-with-a-deep-devotion-to-profits","status":"publish","type":"post","link":"https:\/\/finzexpert.com\/blog\/how-to-invest-during-a-presidency-with-a-deep-devotion-to-profits\/","title":{"rendered":"How to Invest During a Presidency With a Deep Devotion to Profits"},"content":{"rendered":"\n<div data-testid=\"companionColumn-0\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cThe chief business of the American people is business.\u201d That <a class=\"css-yywogo\" href=\"https:\/\/blogs.loc.gov\/inside_adams\/2019\/01\/when-a-quote-is-not-exactly-a-quote-the-business-of-america-is-business-edition\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">declaration<\/a> by Calvin Coolidge has been shortened and simplified since that Republican president uttered it before an assembly of <a class=\"css-yywogo\" href=\"https:\/\/www.presidency.ucsb.edu\/documents\/address-the-american-society-newspaper-editors-washington-dc\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">newspaper editors<\/a> a century ago.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But the notion that the business of America is business was on conspicuous display at President Trump\u2019s inauguration. It may be the chief reason for heightened optimism about the stock and bond markets.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Plenty of worried readers have been writing in \u2014 asking how, in broad strokes, they ought to deploy their money during the second Trump presidency. It is both a pressing problem and an eternal quandary, one that, in investing jargon, is labeled asset allocation. How do you divide up your money to get the most reward for the least risk? The new administration is presenting investors with outsize rewards and monumental risks right from the start.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Certainly, the Trump inauguration is conveying conflicting messages and meanings. In his long formal inauguration speech in the <a class=\"css-yywogo\" href=\"https:\/\/www.aoc.gov\/explore-capitol-campus\/buildings-grounds\/capitol-building\/rotunda\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">Capitol Rotunda<\/a> and then in a stream of well-publicized remarks as well as a flurry of executive orders, Mr. Trump has touched on many of his favorite and most contentious subjects.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-1\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">They include declarations of two states of emergency, enabling the deployment of the military for mass deportations and bolstering presidential authority to promote fossil fuels. President Trump also promised to impose tariffs on China, Mexico, Canada and Europe; seize the Panama Canal; buy Greenland from Denmark; place an American flag on Mars; and, generally, fulfill America\u2019s \u201cmanifest destiny.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Depending on your personal politics, these initiatives may seem profoundly unsettling \u2014 or refreshingly disruptive. But in Mr. Trump\u2019s meandering pronouncements, one thread was clear and consistent.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">By giving pride of place at his inauguration to a coterie of rich tech executives \u2014 Elon Musk of Tesla, Jeff Bezos of Amazon, Mark Zuckerberg of Meta, Sundar Pichai of Google and Tim Cook of Apple stood in <em class=\"css-2fg4z9 e1gzwzxm0\">front<\/em> of cabinet nominees like Robert F. Kennedy Jr. \u2014 the Trump team emphasized its relentless commitment to the pursuit of profit. Big business has an inside track in the second Trump presidency, and those with a stake in those businesses have reason to rejoice.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">I\u2019m not jumping on any bandwagon. Based mainly on the fact that the United States has survived for nearly 250 years and that its economy has surmounted countless setbacks and managed to prosper, my own view is that it still makes sense for individual investors to rely on the classic principles that have worked for decades.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">I\u2019ve been sketching the outlines of what academic finance tells us about investing over many years, but at a fraught moment like this, it\u2019s worth a straightforward review. So here are core elements of what I think everyone needs to know about asset allocation.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-2\">\n<div class=\"css-53u6y8\">\n<h2 class=\"css-13o6u42 eoo0vm40\" id=\"link-6d9ee804\">Diversify, Don\u2019t Gamble<\/h2>\n<p class=\"css-at9mc1 evys1bk0\">Great fortunes have already been made since the Trump victory. One beneficiary is Mr. Trump\u2019s new sidekick and well-heeled supporter, Mr. Musk, whose Tesla shares have risen more than 60 percent from Election Day through Friday. Another is the Trump family itself, whose new cryptocurrency has quickly become one of the world\u2019s most valuable speculative digital ventures.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">If you have piggybacked on these bonanzas and reaped magnificent gains, good for you. In a small sense, I suppose I have, too. I don\u2019t own cryptocurrency directly, or the shares of any individual company\u2019s stocks or bonds, but I\u2019ve got stakes through low-cost global stock and bond index funds. Even cryptocurrency is included in my holdings, indirectly, through companies like MicroStrategy and Coinbase.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But I\u2019m not making short-term bets of any kind and, as an investor, I\u2019m not trying to figure out what will rise or fall over the next four years. Instead, I\u2019ve placed permanent wagers on the overall markets through index funds, which don\u2019t require me to pick individual stocks or bonds or monitor their performance closely. This is the approach I\u2019d take under any president.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Most academic studies have found that simply remaining in the markets over the long haul has been an excellent approach \u2014 one that few professional traders beat.<\/p>\n<h2 class=\"css-13o6u42 eoo0vm40\" id=\"link-1aa81bfe\">Finding a Balance<\/h2>\n<p class=\"css-at9mc1 evys1bk0\">There\u2019s always risk in investing. But in the sense used by <a class=\"css-yywogo\" href=\"https:\/\/www.investmenttheory.org\/uploads\/3\/4\/8\/2\/34825752\/benjamingraham_iibook.pdf\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">Benjamin Graham<\/a>, the Columbia finance professor who was Warren Buffett\u2019s mentor, investing is a long-term and serious endeavor. It\u2019s as different from speculation as value is from price. In investing, you are not making quick bets. Instead, you are expecting that over many years, the growing, underlying value of your holdings will ultimately be reflected in their ephemeral market prices.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-3\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">This underlying value is supposed to protect you against loss, though over short periods, when markets plunge, even solid businesses fall sharply in price. Squaring that circle \u2014 obtaining the greatest reward for the least amount of risk you are able to bear \u2014 is what diversified asset allocation aims to accomplish.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Professor Graham and his student, Mr. Buffett, assessed individual securities with great care and with a laborious and well-documented method that depended ultimately on wise judgment. Most people have neither the talent, background nor time for that, which is why both of these eminent investors recommend low-cost index funds for the vast majority of us.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">People with short horizons \u2014 say, older retirees or a parent putting away money that will be needed for a child\u2019s education in the next few years \u2014 are especially vulnerable to the consequences of serious losses.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">For the truly risk averse, stocks may be unwise. Safer, fixed-income securities may be well-suited for people who won\u2019t have time to recover from major setbacks.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Short-term Treasuries \u2014 held as individual securities, through money-market funds or in short duration bond funds \u2014 won\u2019t generate hefty returns but won\u2019t inflict significant losses, either. Sometimes, protecting your money is far more important than getting a great return.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-4\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">That said, stocks have outperformed bonds over long periods, and for those with the time and ability to ride out losses, broad holdings of stock in global market index funds may be the investment of choice. If you\u2019re just starting your career, you may want to put all the money you are stashing away for retirement in broad stock funds, funneling some of it into bonds only later, when your career trajectory is shorter.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">These alternatives \u2014 a risk-averse person holding only short-term Treasuries and a risk taker with plenty of time going 100 percent into stock \u2014 represent two asset allocation extremes. For those seeking strong returns along with a degree of stability, something in between may be better.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">How much in stock and how much in bonds? There\u2019s no scientific solution to this question. The conventional answer is 60 percent stocks and 40 percent bonds for a typical investor \u2014 but none of us are entirely typical, and what we think we can handle may differ from what we can actually accept in a big market decline.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">William J. Bernstein, author of <a class=\"css-yywogo\" href=\"https:\/\/www.mhprofessional.com\/the-four-pillars-of-investing-second-edition-lessons-for-building-a-winning-portfolio-9781264715916-usa\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">\u201cThe Four Pillars of Investing,\u201d<\/a> reminded me of this in a phone conversation. \u201cEstimating your risk tolerance in advance is like experiencing a crash in a simulator. You\u2019re not going to respond the same way in a real airplane.\u201d Some people may be able to shrug\u200c off a big loss, knowing that the stock market has usually recovered in \u200cjust \u200ca few years\u200c and gone on to greater heights\u200c. Others may realize that they were \u200cfar \u200cmore aggressive \u200cwith their investments \u200cthan they had understood. \u201cIf \u200cyou realize that\u200c that happens, by all means, change your allocation to one that lets you sleep at night\u200c,\u201d he said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">History shows that under most presidents \u2014 including Mr. Trump, in his first term \u2014 the U.S. stock market has risen. This time could be different, yet the greater risk may be staying aloof and missing out on economic growth and corporate profits.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-5\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Your political views needn\u2019t determine your financial approach. Instead, find an all-weather allocation that you can live with and try to stick it out.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n","protected":false},"excerpt":{"rendered":"<p>\u201cThe chief business of the American people is business.\u201d That declaration by Calvin Coolidge has been shortened and simplified since that Republican president uttered it before an assembly of newspaper editors a century ago. But the notion that the business of America is business was on conspicuous display at President Trump\u2019s inauguration. It may be [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":827,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[619,620,413,535,621],"class_list":["post-826","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan","tag-deep","tag-devotion","tag-invest","tag-presidency","tag-profits"],"_links":{"self":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=826"}],"version-history":[{"count":0,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/826\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media\/827"}],"wp:attachment":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}