How RWM will Trade Decision 2016

The marathon presidential election campaign finally (hopefully) will come to an end tomorrow after countless polls, surprises and shifts in sentiment. Markets have become more volatile in recent weeks as it has approached Election Day.  With ballots about to be cast there are three possible stock market outcomes on Wednesday: the markets surge, tread water, or plunge.

It is in emotional and turbulent times like these where being disciplined and sticking to an investment plan is most difficult, but often most rewarding. The investment plan spells out what to do when certain investments rise or fall and can take the emotion out of the equation, which can otherwise drive counterproductive decisions.

If stock markets’ surge we will look to potentially sell gains from stocks and add to the fixed income holdings. We will, our course, be mindful of tax issues.  While the past month has seen stocks decline, a large jump in stocks may see equity allocations push past their targeted thresholds.

If stock markets’ tread water than the election played out largely as the markets had expected and no moves will likely need to be made.

However, if stock markets’ plunge we will look to add to US and/or foreign stock holdings if they have fallen past certain thresholds. In this instance we would look to sell from the fixed income allocation as it will likely be up.  The shorter term and higher credit quality nature of the fixed income allocation is designed to provide stability in times of high volatility; specifically for situations like this.

These are the action plans we will be looking to implement following the election and we will be monitoring markets closely. Regardless of the outcome, if you stay disciplined to your investment plan the election will be at worst a small bump in the road on the way toward your financial destination.

 

Index Performance Oct. YTD Trl 1 Yr
US Stock (Russell 3000) -2.16% 5.84% 4.24%
Foreign Stock (FTSE AW ex US) -1.34% 4.75% 0.96%
Total US Bond Mkt. (BarCap Aggregate) -0.76% 4.99% 4.37%
Short US Gov. Bonds (BarCap Gov 1-5 Yr) -0.21% 1.97% 1.52%
Municipal Bonds (BarCap 1-10yr Muni) -0.58% 1.98% 2.40%
Cash (ML 3Month T-Bill)  0.03% 0.27% 0.31%

 

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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