With the election of the new American president Donald Trump, there have been hopes in the business world that stocks are going to soar as the business-friendly president has been elected. This has been the case so much that it is expected that the Trump administration would foster higher economic growth. Nonetheless, the situation on the ground has been different with the New York Stock Exchange diving six points over the first five trading days of this year. This paper discusses the Trump effect with regards to the financial performance of the US market.
The Trump effect has become a term commonly used to refer to business and stock growth in the business world due to the business- and investment-friendly president that has been elected to office. The effect of this presidential election is thus expected to be seen through the exponential growth of the stock markets. This is due to previous evidence that has seen similar elections host various stock market growth rates that were favorable. Nonetheless, the Trump administration has not been successful in creating the growth that is expected with the stock market losing ground for the first five days of trading (Stewart, 2016).
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Predictive patterns such as the financial barometer, on the other hand, are not providing accurate data since it has predicted wrongly for five times in the last ten years. Relational conclusions can therefore not be firmly made based on this decision. With large parties thinking that Trump will either take the economy to the next level or over a cliff, it is important that investors make informed choices. With the Dow rising over the 20,000 mark, one could be lured in to invest. Nonetheless, patience is the key to engaging proper investment in soaring market conditions to avoid any adversity later.
References
Stewart, J. (2016, December 15). The Market and the ‘Trump Effect’: What Do the Tea Leaves Say? Retrieved December 16, 2016, from New York Times: http://www.nytimes.com/2016/12/15/business/trump-effect-investors-stock-market.html?ref=business&_r=0
