Rick Pitcairn, Chief Global Strategist at Pitcairn Financial Group, recently discussed his insights on the current investment landscape with Quartz as part of the “Smart Investing” video series.
ANDY MILLS (AM): Trump has selected J.D. Vance as his Vice President, and Vance has teamed up with Elizabeth Warren on some Wall Street regulations. Is this beneficial or detrimental for investors?
RICK PITCAIRN (RP): It’s still uncertain. The Trump administration still includes pro-Wall Street figures like Laffer and Steve Moore, so there might be internal debates to determine the final policies. The political climate is highly intense, and we are advising our investors to focus on long-term portfolio goals and navigate the market objectively, despite recent volatility.
AM: The market has been performing exceptionally well this year. Do you expect this trend to continue?
RP: Typically, a strong first half, like the 14.2% gain on the S&P 500 we’ve seen, usually leads to a positive second half, though it might not be as robust. Historically, in presidential re-election years, the S&P 500 tends to perform well since administrations try to boost the economy in their favor. It’s unlikely this will change before the election.
AM: With a possible Republican executive branch, should investors make any changes?
RP: Presidential elections rarely have a sweeping impact on the capital markets. Generally, sector rotations occur, with financial and certain other stocks performing better under a Republican administration. Investors should be mindful of these changes, but it’s crucial to maintain a long-term portfolio structure without overreacting to short-term political shifts.
AM: Trump has indicated he wouldn’t reappoint Jerome Powell as the Fed chairman. What could a less independent Fed mean for the markets?
RP: A less independent Fed is concerning. The Fed’s independence is crucial for the economy. If the Fed’s policies become overly influenced for political reasons, it could threaten the currency and markets. Since 2009, we’ve had an easy money policy, and maintaining the strength of the dollar and foreign investment in treasuries is essential, especially given our significant deficit.
AM: Where should investors place their money now?
RP: We advocate for long-term strategic investing. While the S&P 500 has significantly risen, there’s a high concentration in the top 10 stocks. Diversifying investments is wise, including international equities, real assets, and infrastructure, alongside traditional equity positions. This approach prepares investors for potential market slowdowns, ensuring they are not overly reliant on current high performers.
AM: That’s very insightful. Thank you, Rick.