Growth of $1 During President Trump’s First Term January 2017–December 2020

The newspaper headlines over the weekend have been awash with commentary about tariffs, and you may have clients or prospects asking you about your views on various markets which may or may not be impacted by these tariffs.

It may be helpful to look back at the last time President Trump was back in office and China was a target of the US administration back then. How many investors would have expected that China’s equity market would end up outperforming the US equity market during Trump’s first term?

Whenever it appears “obvious” that you should do something because of the latest market news, it can be useful to take a step back and remember that the market is always adjusting to the latest information in real-time. For example, if the latest news is supposedly bad for Chinese equities, then prices would adjust downwards to reflect that very quickly, at a price that would become fair enough to entice buyers of Chinese equities in spite of the news.

So by the time investors read it in the papers and would like to act on it – they’d be acting on old news.

Instead of reacting to the latest news to change your portfolio, it can be reassuring to investors to know that their advisers have selected and are helping to oversee a robust investment portfolio for them based on their need for returns, their investment time horizon, as well as their tolerance for portfolio volatility, and that they’re still on track to achieve their financial goals – regardless of the newspaper headlines.

The attached article can be sent to clients if you think it’s helpful for them. Let us know if you need any additional information.

Source: Dimensional Dimensional Fund Advisors