Rick Pitcairn, Chief Global Strategist at Pitcairn Financial Group, was interviewed by Quartz for their “Smart Investing” video series.
Andy Mills (AM): Trump has picked J.D. Vance as his VP choice, and Vance has collaborated with Elizabeth Warren on some Wall Street legislation that has tamed them in the past. Do you see this as a positive or negative for investors?
Rick Pitcairn (RP): It’s still too early to tell. Core members of the Trump administration like Arthur Laffer and Steve Moore are more pro-Wall Street, so there will be some internal debates to determine the final policy. The political scene is very intense right now, and we advise our investors to keep their long-term portfolio objectives in mind and navigate this tricky market with objectivity, especially after the recent turbulence.
AM: Despite the political climate, the market has been performing well this year. Do you expect this trend to continue?
RP: Our research indicates that if the first half of the year is strong, like the 14.2% gain of the S&P 500, the second half is usually positive, although less robust. Historically, we haven’t seen a down S&P year in a presidential reelection year since 1944, as administrations typically do their best to boost the economy.
AM: What should investors do to prepare for a potential Republican administration?
RP: Presidential elections rarely have a significant impact on the overall capital markets. However, certain sectors can be affected. Financials, for example, tend to perform better under a Republican administration, while green energy stocks might suffer. We recommend focusing on long-term portfolio structure rather than short-term political changes.
AM: Trump has stated he would not reappoint Jerome Powell as Fed chairman. What would a less independent Fed mean for the markets?
RP: A less independent Fed is concerning. The Fed’s role is crucial, and its independence benefits the economy. If Fed policy is influenced by political reasons rather than economic ones, it could threaten our currency and markets. We need to ensure that monetary policy is not swayed by political agendas to maintain the strength of the dollar and the demand for U.S. treasuries.
AM: Where should investors place their money right now?
RP: We are long-term strategic investors. While the S&P 500 has seen significant growth, it’s wise to diversify and not concentrate solely on the top performing stocks. Investors should consider international equities, real assets, gold, and infrastructure for a well-rounded portfolio. Diversification is essential to position oneself for when the momentum-driven market eventually slows down.
RP: Thank you very much, Rick.