Market positioning (and managing emotions) in a Trumpian world

As we are all too aware, it’s practically impossible to start, or end, the day without some *breaking* news from The White House. Whether it’s new tariffs (on, then off, then on again), mammoth changes in defence support, or threats to unwind dozens of regulations to “Make America Great Again”, Trump cannot be accused of resting on his laurels.

However, all these developments bring with them a raft of volatility. A quick look at the markets shows that roughly $5 trillion has been wiped off the value of world stocks since Trump’s inauguration, and the VIX - which measures the shakiness of the S&P 500 - is now almost a third of the way to its pandemic peak.

Against this backdrop, how on earth should you be investing? And, I wonder, how can you manage your own emotions when faced with such global turmoil?

Far be it from me to advise, but I heard from a range of asset managers at RSMR’s London conference who shared their insights into (financially) navigating such an uncertain world. It seems there are some parallels to be drawn between one’s investing strategy and one’s self-regulation. Here are some of their top tips:

"Ignore the waves, but still think about the undercurrents”, Karen Ward, Chief Market Strategist for EMEA at J.P. Morgan Asset Management

Karen suggested we should turn off the TV to prevent ourselves from being derailed by political news. Instead, she recommended concentrating on longer-term trends which we know for certain are coming down the track i.e. changing demographics, the growth of AI and more broadly, a more fragmented global ecosystem.

“It’s not about Trump”, Michael Browne, CIO, Franklin Templeton

Michael agreed that we need to look beyond what our orange friend is saying. However, his focus was more on the energy market, asserting that we are entering an era of energy abundance, accelerating exciting investment opportunities in this space.

“Be light on your feet and react to news”, Akanksha Ganju, Client Portfolio Manager, Goldman Sachs Asset Management

While Akanksha didn’t recommend trying to second guess what Trump is planning next, nor acting based only on what is said, she had a very different approach to her peers. Her recommendation was for a nimbler approach of acting promptly based on what has been announced and ensuring her portfolio is positioned for any shocks.

“Prepare, don’t predict”, Matthew Rees, Head of Global Bond Strategies, LGIM

Yes, we live in uncertain times, but we have been in a period of uncertainty for some time now. The most prudent action therefore, according to Matthew, is to prepare for what may happen, rather than attempting to predict the future of the economy – managed best through diversification.

And finally, a comment from Dominic O’Connell, Business Presenter at Times Radio which was very telling. He shared that Trump has very little “beyond the moment memory”. This wasn’t a criticism on his mental capacity, but rather highlighting that Trump can be very passionate about a topic one moment and then have entirely forgotten about this a day later. This perhaps explains why certain areas may appear to be the be-all and end-all one week, but then totally disregarded the next. With this insight, the importance of not reacting to Trump talk and perhaps considering the bigger, longer-term picture needs to be front of mind for us all.

Does that help when trying to manage market volatility?  Perhaps.

How about for those trying to keep our emotions in check during this new Trumpian world? Absolutely - the sentiment of not having a knee-jerk panicked reaction to everything that is said in the White House, but instead looking at the broader, known, long-term view can be hugely reassuring. Maybe that’s something we all need to bear in when digesting the next round of Trump news.