How Do Investors Really Feel About Trump's Inauguration
With the Donald Trump's inauguration looming, investors still aren't quite sure what to make of the new Commander in Chief.
A new study by Bankrate asked Americans whether the election results would produce a positive or negative impact on their personal finances. The answer was fairly murky: 28% thought it would affect their bottom line positively, 26% thought the result would be negative and 39% said it wouldn't affect them either way.
Great. Glad we had that solid year of shouting, turmoil and airing of grievances. So worth it.
"The discord our country has experienced over the past year continues," says Bankrate chief financial analyst Greg McBride. "There is still disagreement - and no clear consensus - among Americans on whether the new administration will impact household finances, and if so, how."
Among certain pockets of those same Americans, however, opinions are a bit more cohesive. Baby Boomers, especially younger Boomers ages 52 to 61, told Bankrate that they think the Trump administration is going to work out fairly well for their finances, with the highest-income households sharing their optimism. When financial firm UBS surveyed wealthy investors before and after the election, the number of those investors feeling optimistic about Trump's prospects rose from 39% to 48%. The number who expected positive returns for the S&P 500 over the next six months rose from 25% to 53%, helped along by the stock market's performance in the interim.
The wealthiest investors overwhelmingly (90%) believe that D.C. needed some disruption, while 66% think Trump will affect the changes they'd like to see in health care, national security and the overall economy.
"Before the election, we saw many investors adopt a defensive stance, raising cash and moving away from stocks," says Paula Polito, client strategy officer of UBS Wealth Management Americas. "With the election behind us, many investors are looking ahead with a growing sense of optimism about the economy and the markets."
Again, that's many, but not all. Among those who told Bankrate they felt optimistic about the Trump administration, 35% think they'll pay less in taxes, 24% think their income will increase, 18% think the value of investments will rise, 9% think their expenses will decrease and 4% think all of the above will be true. However, Millennials, Generation X and the Silent Generation of older Americans -- and middle-class households with annual incomes between $30,000 and $70,000 a year -- expect to higher taxes (28%), higher expenses (25%), decreasing income (20%), and decreasing value of investments (11%). Oh, and there are 9% who think that all of the above will come to pass.
That explains some of the divisions in investment strategy since the election. Generally, before the election, UBS says that half of investors moved to protect their money. Nearly a third increased their cash holdings, while a quarter (25%) shifted to a more conservative asset allocation or cut back on spending (23%). Only 9% increased investments in the stock market. After Election Day, the number of investors who planned to shift to a more conservative allocation has dropped to 15%, while the number of investors planning to increase investments in the stock market nearly doubled to 17%. Overall, roughly 40% investors intend to make changes to their portfolios, mostly based on their political preferences.