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I am sure this issue is, or should be, on the minds of many of Switzer readers.
With the possibility of Donald Trump becoming President now seemingly a real probability what hedge strategies should investors be enacting (now).
I am in pension mode and eighty percent invested in equities. My thinking is to reduce down to forty percent and wait and see.
A: While I think the odds of Donald Trump becoming elected are slim, I also think that markets have a tremendous ability to put political events to one side.
In particular, the US system of government has so many checks and balances, that when it comes to domestic policy, the US president has very limited real power.
I think in Australia we really misunderstand how the US system actually works.
Sure, if Trump is elected, the market will sell-off – but what it looks like 3 months after that is another question. I would be cautious about down-weighting to the extent you suggest – but by all means, take some protection.
Potentially, you could buy some pot options on the index, or some of the stocks you hold. There are also synthetic products like Betashares Australian Equities Bear Fund (ASX Code BEAR).
