For investors fretting over Donald Trump’s unpredictability, it’s worth remembering that market volatility creates many buying opportunities. If a security a Portfolio Manager has been eyeing is too expensive, we may be just a Trump tweet away from them seizing the opportunity and adding it to our portfolio.

Stock markets will rise and fall with Geopolitical events perceived as positive or negative. These events can include the news on acts of terrorism/war, higher or lower tax rates, or the threat of trade tariffs. Events perceived as negative can cause investors a lot of anxiety; this may make them feel nervous and wonder if it is a good time to sell their stocks, locking in any profits they have already achieved. Alternatively, news of a corporate tax cut or reduced regulations can be positive for businesses as they may expand or increase sales due to the lower costs. Such news often inspires investors to purchase a company’s stock, causing it to rise.

Volatility can be Good for Investors

Markets are made up of various traders who have different beliefs, assumptions, and estimates about the companies that make up the stock market. Volatility in the market simply reflects the changes in investors’ assumptions and estimates. If everyone thought the same way, the market would cease to function. There have to be different opinions for trade to happen.

Professional money managers spend their days analyzing company fundamentals and looking for opportunities to purchase stocks when they fall out of favor—for whatever reason. There is a saying in our industry: Be brave when others are fearful, and fearful when others are brave.

The bottom line is that we need to set aside some of the daily noise we hear in the news and return to the fundamentals that have historically driven returns. As we move through this geopolitical uncertainty, we may see some market volatility in the next few months. However, this too shall pass, and those investors who stay invested and focus on their financial goals will be rewarded in the long run.

We are always here to answer your questions and provide guidance. If you would like to discuss your portfolio, give us a call.

Have a great weekend,

Tracey and Paige

Sources: Original article posted on Advisor.ca 05-07-18 by Sharon Ho.

Sources; TD WEEKLY REPORT for December 31st 2018,MT 2019-0206 https://www.bloomberg.com/news/newsletters/2025-02-06/pimco-sees-opportunity-in-trump-induced-bond-volatility

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