Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Chief Macro Strategist
Ready for Trump 2.0? Navigating Market Volatility as Long-Term Investor
Key points:
- Markets Are Resilient: Over time, global markets have consistently rebounded from major crises, including wars, pandemics, and financial meltdowns, proving their ability to reward patient, long-term investors.
- Focus on Fundamentals, Not Noise: Political uncertainty and short-term market volatility often dominate headlines, but they rarely impact the underlying value of well-diversified portfolios.
- Stick to Your Plan: Maintaining a disciplined, diversified investment strategy and ignoring short-term distractions is key to navigating uncertainty and capitalising on long-term growth opportunities.
How to Prepare and What to Expect As a Long-Term Investor
Donald Trump has been handed the keys to the White House and his return to the centre of political stage has reignited debates about how his policies might shape financial markets. Known for his bold and often unpredictable approach, Trump’s presidency previously brought tax reforms, trade wars, and deregulation—all of which contributed to significant market volatility. Now, investors are asking: What will Trump 2.0 mean for their portfolios?
While Trump remains notoriously unpredictable, history provides us with some answers. During Trump’s first term, markets experienced periods of heightened uncertainty, but they didn’t just survive—they thrived. Despite dramatic headlines and policy swings, global equity markets delivered strong returns. Over the past 15 years, global equities (MSCI ACWI) have returned 292%, weathering events like the US-China trade war, Brexit, debt crisis in the Euro area and COVID-19. This resilience highlights the importance of focusing on long-term goals rather than being distracted by short-term noise.
And here’s an even broader truth: the market has weathered much worse than the policies of any president. From pandemics to wars, financial crises to geopolitical upheavals, the market has historically always found a way to recover and reward patient investors. This resilience is a testament to the adaptability and innovation of global businesses and economies. For every moment of crisis, there has been recovery—and often, significant growth.
Note: Data on MSCI ACWI TR Net, USD, period Jan-2010 to Jan-2025. Past performance is no guarantee of future returns, and returns can be negative.
Still worried about Trump 2.0? Here are five suggestions how to navigate this new chapter of political uncertainty as an investor.
1. Separate the Noise from the Fundamentals
Political events, like elections and policy swings, often dominate the news cycle, and it’s very easy to feel overwhelmed by “headline anxiety.” However, not every headline materially impacts your portfolio every seem overly important. For instance, while Trump’s tariff announcements triggered immediate market reactions, the long-term fundamentals of many businesses remained unchanged. This highlights the difference between short-term noise and factors that genuinely affect an investment’s value.Therefore, before reacting to market movements, ask yourself: Does this event fundamentally change the companies or assets I’m invested in? Often, the answer is no. Staying focused on the long-term value of your investments helps you avoid costly emotional decisions.
2. Stick to Your Plan
It’s always easy to find something to worry about as an investor, but don’t let it derail you. Markets thrive on uncertainty, and the best way to manage this is by following a disciplined investment strategy. During Trump’s first presidency, volatility spiked around key events like trade negotiations. Yet, those who stayed the course were rewarded as markets recovered and reached new highs.Even in the face of global crises—such as the 2008 financial collapse or the COVID-19 pandemic—markets eventually rebounded. Long-term investors who held their ground during these tumultuous periods were rewarded with significant gains over time.
Pro Tip: Define your financial goals and risk tolerance, then build a diversified portfolio that aligns with them. Let your strategy guide your decisions rather than reacting to daily market fluctuations.
3. Markets Have Overcome Much Worse
While political uncertainty can feel overwhelming, it’s crucial to put it into perspective. Markets have faced—and survived—some of history’s most daunting challenges:- Pandemics: The Spanish flu of 1918, the 2003 SARS outbreak, and the COVID-19 pandemic tested economies worldwide. Yet markets rebounded each time, often emerging stronger than before.
- Wars: World wars and regional conflicts have brought immense uncertainty, yet businesses adapted, rebuilt, and continued to innovate.
- Crises: From the 2008 financial meltdown to the dot-com bubble, major economic disruptions caused panic but ultimately created opportunities for growth.
These events demonstrate that markets are far more resilient than they may appear in the moment. They adapt, recover, and reward those who stay invested through the storm.
4. Diversify to Manage Risk
Diversification is one of the most effective ways to navigate uncertainty. By spreading investments across asset classes, sectors, and regions, you reduce the risk of being overly exposed to any single factor. During Trump’s first term, sectors like energy and industrials experienced significant swings due to policy changes, but investors with diversified portfolios were better insulated.How to Diversify: Consider broad-based funds like ETFs or global indices that offer exposure to a mix of sectors and regions. This approach allows you to capture opportunities across markets while managing volatility.
5. Prepare for Volatility but Don’t Fear It
Periods of uncertainty, such as the inauguration of Trump and concerns about future policy moves, can lead to market volatility. While it may be tempting to sit on the sidelines, history shows that volatility often creates opportunities. For instance, during the COVID-19 downturn, investors who stayed invested or added to their positions in undervalued sectors saw significant gains as markets rebounded.Therefore, if your risk tolerance allows, consider keeping a portion of your portfolio in cash to take advantage of buying opportunities during market dips. At the same time, ensure your core portfolio remains diversified and aligned with your long-term goals.
Final Thoughts
The market’s long-term resilience is a testament to its ability to overcome adversity. From wars to pandemics, from financial crises to political uncertainty, the global economy has always bounced back—and often, it has rewarded patient investors with extraordinary growth.As Trump 2.0 unfolds, don’t let short-term noise derail your investment strategy. Remember, the market has faced far greater challenges than a single president and has always proven its resilience. By focusing on diversification, staying disciplined, and maintaining a long-term perspective, you can navigate uncertainty with confidence.
In investing, patience is not just a virtue—it’s a strategy. Stay calm, stay invested, and trust the market to do what it has always done—recover, grow, and reward those who believe in its long-term potential.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: The ride just got rougher
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
China Outlook: The choice between retaliation or de-escalation
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: A bumpy road ahead calls for diversification
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX outlook: Tariffs drive USD strength, until...?
John J. Hardy
Chief Macro Strategist
-
Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
Disclaimer