Weekly Market Recap This week the financial markets and the media were dominated by the outcome of the US election. It was a Republican sweep. Donald Trump won the Presidency and the GOP retained the House, and the Senate, by a smaller margin. Volatility in many financial markets was elevated around election night. Ultimately the outcome was met with a positive market reaction across most developed stock markets. One example of the volatility around the election is the Japanese stock market index, the Nikkei, which fell over 5% when a Trump victory first seemed probable. This lead to the media using terms like "plummet" and "tank" only to see the Nikkei reverse and move up just under 7% the next day. This example shows that potential sensationalism in the media, and short-term reactions in the markets, isn't always helpful when looking to maintain a consistent investment strategy. The election outcome also highlights the importance of diversified sector exposure. If you pick stocks for your own portfolio, you may, perhaps inadvertently, find yourself under- or over-exposed to certain sectors of the economy relatively to the broader market. Going into the election, many investors sold stocks in the pharmaceuticals, financials, and industrial sectors only to see those sectors perform notably well relative to the broader US market after the election. Having a diversified sector approach, such as tracking a broad stock market index, can help buffer your portfolio from short-term swings in market sentiment. Disclaimer:
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