Why slow and steady works in the stock market

Staying invested is a dependable route to prosperity, even in times of uncertainty

- Jeff Sommer

The US stock market is booming. Since Donald Trump won the presidency once again, traders have been happily driving share prices up.

Stocks have reached new highs, the dollar is strengthening and bond yields have moved up in the expectation that Trump's victory will mean not only accelerated economic growth but also, quite possibly, another surge in inflation.

Making cool financial calculations about the implications of the Trump triumph, as market traders are doing, may be the last thing on the minds of voters who had hoped that Vice-President Kamala Harris would win the presidency and that Trump would never become president again. If you are afraid that democracy is in imminent danger, how your investments are performing may seem the least of your worries.

Yet regardless of your political orientation, you need a financial plan that you can rely on even in times of stress, particularly for investing.

Will the markets rise or fall further now that a second Trump administration is in our future? Tax cuts are likely, but Trump has also repeatedly vowed that he will impose tariffs on goods from China and many other countries too, measures that could lead to increased inflation, reduced international trade and a drag on the global economy. And while Trump has promised to crack down on illegal immigration and to initiate mass deportations, the effects of such policies on the US labor market and on industries like construction and agriculture that depend on immigrants can't be reliably estimated.

It's unlikely that the markets have fully absorbed the implications of all the policies Trump and his allies espoused over the course of an unruly political campaign.