Note: This article is courtesy of Iris.xyz
By Brad Sherman
GOP presidential nominee Donald Trump has had one of the most hectic campaigns in recent memory.
He has made so many newsworthy remarks that it is hard to keep up. One day last week was particularly impressive as he made over 10 news-making assertions in under 24 hours. These included initially refusing to endorse House Speaker Paul Ryan, doubling down on his feud with Gold Star parents Khizr and Ghazala Khan and predicting that the election will be rigged.
Whether you support him or not, simply finding the time in the day to make all those remarks (and more) is impressive. But there was one opinion in particular that caught our eye, via CBS’s Sopan Deb. Trump made the below statements during an interview with FOX Business Network’s Stuart Varney:
Varney: For the small investor, the average guy, right now, would you say, yes, put your 401(k) money into stocks?
Trump: No, I don’t like a lot of things that I see. I don’t like a lot of the signs that I’m seeing. I don’t like what’s happening with immigration policies. I don’t like the fact that we’re moving tremendous numbers of people from Syria are coming into this country and we don’t even know it. Thousands of people, thousands and thousands of people. There’s so many things that I just don’t like what I’m seeing. I don’t like what I’m seeing at all. Look, interest rates are artificially low. If interest rates ever seek a natural level, which obviously would be much higher than they are right now, you have some very scary scenarios out there. The only reason the stock market is where it is—is because you get free money.
Even if you are his number one fan, please don’t hire Donald Trump to manage your 401(k). First of all, setting aside the economic truth of what Trump is saying and whether his fears will ultimately influence the market as much as he thinks, every factor that he mentions in his response is short-term. As Trump is 70 years old, focusing on what’s coming immediately down the line is understandable. But most investors have longer to go until retirement and therefore need to be invested in the stock market’s long-term gains, particularly those investors without Trump’s level of wealth.
As Bloomberg points out, Trump’s strategy basically amounts to timing the market. We believe that in the long run, due to the efficient market hypothesis, you can’t beat the returns of the market through individual stock selection and market timing. Therefore, the safest thing to do is to stick with the market, while of course monitoring constantly and rebalancing.