The stock market has enjoyed a strong rally since President-elect Donald Trump won reelection on Nov. 4, 2024, with the S&P 500 rising roughly 6% in a matter of weeks. But the “Trump economy” doesn’t officially begin until the second-term president is sworn into office once again on Jan. 20, 2025.
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When coupled with the uncertainty over what policies Trump will really seek to enact on day one, it might be a good time for boomers to “wait and see” with their investments and avoid making any major moves so as not to get whipsawed.
Here are some of the specific moves boomers might want to hold off on until at least late Jan. 2025 — especially since many of these industries have already spiked higher or may remain volatile.
Some industries have already reacted violently to Trump’s reelection — some upwards and some downwards. This may continue until Trump officially retakes the highest office in the land on Jan. 20, 2025. With volatility and uncertainty in the air, this isn’t the best time to alter your long-term investment strategy.
Just as you should already be doing, continue to add to your accounts monthly, perhaps adding a bit more to positions that are down that you still believe in. But making wholesale shifts in your investment strategy is unnecessary.
It’s important to note that over the long run, who wins the presidential election doesn’t generally affect the market’s intermediate-to-long-term results. According to data studied by U.S. Bank investment strategists, over the past 75 years, economic and inflation trends play a much bigger role in determining market performance than election outcomes.
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While election outcomes don’t tend to have much effect on long-term market returns, they can disrupt it over the short term. Although December and January are historically calendar periods during which the market rises, the three months after inauguration day are typically weaker on a relative basis.
Psychologically, investors are enthused about presidents implementing positive changes once they take office, but as reality sets in, they are often disappointed. As the stock market is an emotional mechanism, this can be reflected in lower stock prices.
According to data from Ned Davis Research, reported by MarketWatch, there’s an inverse relationship between a president’s Gallup Poll approval rating and the stock market. As presidents generally have the highest approval ratings of their entire terms right after inauguration, this could help explain the historical post-inauguration lull.
