Trump’s inauguration and the effect on equities
By International Adviser, 20 Jan 17
As Donald Trump is sworn in as the 45th president of the US, International Adviser has compiled the latest views on how his inauguration may effect your investments.
US equities are unlikely to perform better during President Trump’s tenure than under many of his predecessors, analysis1 by Source, one of Europe’s leading ETF providers, source ETF shows.
The analysis shows that the S&P 500 delivered an annualised return of 13.9% under Barack Obama1 and 15.2% under Bill Clinton1, ranking their terms fifth and third respectively in terms of stock market gains (since 1853).
But with the S&P 500 currently on a Shiller Price-Earnings ratio of more than 282 it is unlikely that it will do better under President Trump, Source says.
Paul Jackson, head of research at Source, said:
“Such a high Shiller ratio is more commonly associated with negative future returns. Valuations are an important determinant of future returns: Reagan and Obama were helped on that front, as were Harding and Coolidge in 1921.
“President Trump does not have that luxury. He should not measure himself by what the US stock market says as I fear the judgement will be harsh no matter what he does.”
Tags: Natixis | Old Mutual
