RZH Insights: “How Do I Invest with Trump as President!”
Important Note: The following is not intended as a political commentary. My goal is to present statistical facts and relevant historical depictions. The thoughts and recommendations presented below are my own, stem from 34 years of experience guiding investors through numerous crises, and do not necessarily reflect the views of anyone else at RZH Advisors.
Unsurprisingly, we’ve been receiving a lot of calls about this – especially after President Trump’s address to Congress on Tuesday, March 4th.
I understand the concern. How can you possibly make sense of the news, let alone craft an investment strategy, when confronted with headlines like these from before and after the election:
“If Trump Wins, It’s the End of the World As We Know It”1
“A Trump Win Would Sink All Boats”2
“Donald Trump Presidency ‘Would Be Dangerous,’ Economists Warn”3
“President Trump Would Be a Global Calamity”4
“Donald Trump wins presidential election, plunging US into uncertain future”5
“Donald Trump’s Victory Is a Disaster for America and the World”6
“The Presidential Election…An American Tragedy”7
“Trump Triumphs: A Shocking Upset That Shakes the World”8
“The unthinkable has happened: America elects Donald Trump”9
“It’s tough to make predictions, especially about the future.”
- Yogi Berra
Unfortunately, we don’t have a crystal ball. When faced with headlines like these, it can be difficult to remain optimistic. Given this level of fear and concern, it’s understandable that you might consider making a change to your portfolio.
That said, I have a confession…the headlines above are not from this presidential election but from 2016, following Trump’s victory over Hillary Clinton. As you can see, similar fears and concerns have surfaced before.
I even wrote a newsletter on February 14, 2017 titled “Trump Fear…Is it time to change my strategy?” In that newsletter I include this article, written by the NY Times, with a timeless message and which could easily be republished today without any edits.
Even with an abundance of fear, during President Trump’s first term, the S&P 500 rose about 83%, delivering an annualized return of 16%. Remarkably, volatility was below average during these four years, even with a 20% market decline in 2018 and a 34% drop in early 2020.10
Now, at this point, half of my readers are probably unhappy with me.
So, for the other half, let’s rewind again – this time to Joe Biden’s presidency. I remember receiving the same anxious calls back then from the other half of my client base. Yet, the S&P 500 still rose about 65% under Biden, with an annualized return just under 13%. 11
Both presidents oversaw above-average market returns. How did this happen when the last eight years have inarguably seen the most partisan political environment, and fear of the other, in our lifetime?
I submit that it wasn’t about politics or those in charge, but rather due to the American spirit, innovation, and our resiliency. It was about the relentless drive of great American companies to adapt, strategize, innovate and create value – regardless of political turbulence or global uncertainty. This is why the mantra “Don’t mix politics with your portfolio” is more relevant than ever.
“This Time Is Different…”
These are considered the four most dangerous words in investing. The media is screaming that we must take action and “do something.” The urge to react – to protect oneself – is powerful and is driven by a feeling of fear and helplessness. I understand this. It’s one of the hardest temptations I’ve had to resist to be a disciplined investor and successful for my clients.
“It ain't what you don't know that gets you into trouble.
It's what you know for sure that just ain't so.”
– Mark Twain
At a time like this, the fundamental question is: Are you an Investor or a Speculator?
- If your investment approach is rooted in a long-term plan – one that we’ve carefully crafted and refined together – then you’re an Investor.
- If your strategy shifts based on headlines, economic predictions, or market volatility, then you’re a Speculator.
Here’s the key difference:
- Investors stick to a well-thought-out plan, regardless of market noise.
- Speculators react – or worse, try to predict what happens next.
All of that being said, what I think I know for sure is that there is going to be a significant amount of volatility over the next year as global markets analyze and digest the firehose of policy coming out of Washington. President Trump promised as much in his speech on Tuesday when he said “Will there be some pain? Yes…”
When Is It Actually Time to Move to Cash?
In my 34-year career, there have been only two moments where I seriously considered moving clients out of stocks and into cash:
The 2008 Financial Crisis – A truly existential threat to the global financial system that almost incinerated world financial markets.
Early 2020 (COVID-19) – A completely unknown threat with potentially catastrophic mortal consequences.
In 2008, we took moderate action. In 2020, we held tight – and ended up buying near the bottom.
This moment is not presenting like 2008 or 2020. History tells us not to speculate. Let RZH help you remain an Investor.
The Bottom Line – You Can’t Predict the Future, You Can Only Plan For It
Markets have experienced a Trump Presidency before and come out the other side ahead. We understand and are sensitive to your concerns. In particular, I tremendously appreciate your calls, perspectives and the insights from our clients in the business community who are on the front lines of the tariff battles.
We have carefully crafted our client’s financial plans to weather economic uncertainty (like what we are experiencing today) and to achieve their most cherished objectives. When doing this we:
- Strategically allocate to cash, Treasurys, and short-term bonds to cover years of financial needs – keeping multiple years of cash flow “out of harm’s way.”
- Focus on implementing probability-based strategies
- Own high-quality investments, historically known for handling volatility
- Take profits off the table during the good times, before the storm hits
- And perhaps most importantly, we constantly remind our clients that the worst plan is the one not followed.
I know this is a difficult time for our country. We stand with our clients and are here for you, no matter what. Together, we’ll navigate through this turbulence and emerge stronger on the other side.
It’s an honor to be a part of your financial journey. At RZH, we all embrace the significant responsibility of managing your wealth so that you can live your best life and protect those you love.
Please don’t hesitate to reach out. We’re here to discuss your concerns and ensure your plan remains resilient.
Warmest regards,
Carl J. Zuckerberg, CFP®, AIF®, CIMA®
Principal, Chief Investment Strategist
[1] The Daily Beast. October 25, 2016.
[2] The New York Times. October 31, 2016.
[3] The Guardian. August 3, 2016.
[4] Foreign Policy. March 7, 2016.
[5] The Guardian. November 9, 2016.
[6]Slate. November 9, 2016.
[7] The New Yorker. November 9, 2016.
[8] TIME Magazine. November 9, 2016.
[9] The Washington Post. November 9, 2016.
[10] YCharts. S&P 500 January 20, 2017 to January 20, 2021.
[11] YCharts. S&P 500 January 20, 2021 to January 20, 2025.