Election Reaction: Now What?

Wow.

We’re in Denver this week, for the annual gathering of people who work in the Sustainable, Responsible, Impact (SRI) investing industry: The SRI Conference. On Election Night, confident in the narrow but effective margin that the polls seemed to be showing in favor of Hillary Clinton, we accompanied a dozen or so other attendees to a restaurant down the street, to celebrate the success our investment advisory businesses — and our clients — have had in the last year. But our celebratory mood gradually shifted, first to skeptical concern, then to distress, then to … disbelief and shock. Our walk back to the hotel was cold and quiet.

We supported Secretary Clinton’s bid for the White House because we believed that her positions on issues of social justice and environmental sustainability, which lie at the heart of our business and our clients’ portfolios, are better for America and the world. And it appears this morning that a very thin majority of American voters agreed with us — but because of the distribution of those voters, and the oddities of the Electoral College system, Donald Trump will be our next President. As happened in 2000, it appears that the Democratic candidate has won the popular vote but lost the election

As Election Night progressed, stock markets in Asia and stock futures markets in North America both slumped. The results surprised even the most seasoned traders, it seems, who pretty solidly expected a Clinton victory. But during the course of the day today, US markets have rebounded, and have closed with substantial gains. This is probably due in large part to traders’ delight in the end of the election; election uncertainty made the markets volatile and hesitant to rise over the last few months, so now that we know the result, we can move forward. As CNBC reported, ‘”Overnight was all about uncertainty. Today we know the result,” said JJ Kinahan, chief strategist at TD Ameritrade.’

Today’s relief rally aside, there are strong reasons to be concerned about what’s to come in the new administration. Some economists are convinced that if Trump manages to put many of his proposed policies into effect, he’ll kick off a deep and difficult global recession. And it seems clear that his social and environmental policies will not be supportive of immigrants, people of color, the LGBTQ+ community, the global environment …  On the other hand, the economists we listen to most closely are estimating the chances of a serious recession at 20% to 30%. That’s not a very large risk, all things considered.

What do we plan to do about all of this? Well, the speakers at The SRI Conference are doing their best to inspire us all to continue with our efforts — to keep up our work on encouraging poor corporate citizens to improve, our work to identify and invest in new, excellent companies, and our work to support community development in areas that need help. There is a lot that we can do to support and encourage these efforts, by deploying our clients’ capital intelligently.

What do we think our clients ought to do with their assets? There aren’t any quick and easy rules, unfortunately, to let us know what is likely to be the best approach for all our clients. Each situation is so different — time frames, return requirements, tolerance for risk, social criteria …  But we do want to take this opportunity to urge any of our clients who might be feeling significant concern for the future to get in touch with us soon. We can explore your individual circumstances, and discuss what sort of changes we might want to make to your portfolio in light of the changes we’re all facing.

And we want to urge all our readers to continue the hard work of fighting for social justice and environmental sustainability! No matter how it ended, this election was never going to be the end of the struggle. Keep up the good work!

 

For more on our reaction to the election, we have written a five-part series on the problems and opportunities it poses. Here’s a link to Part 1: Tax Law Changes.