Trump-like Executive Actions to Take for Your Portfolio

During his inaugural address, President Donald Trump said, “From this day forward, it's going to be only America first.”Like his campaign slogan, Make America Great Again, this call to action resonated with a particular segment of Americans who want lower taxes, more jobs and less political corruption. Trump started this work by signing a host of executive orders in the first month of his presidency.

Politics aside, is there a lesson to learn from Trump about how to better your own financial life?

It’s time to make your portfolio great again

Executive actions are directives presidents gives to the federal government and related agencies regarding politics and policy. Similarly, make sure to direct your financial future by emphasizing safety, security and control in your portfolio.

1. Aim for safety

President Trump aims to secure U.S. borders including building a wall along the border with Mexico to “make America safe again.”

How can you do the same for your portfolio?

• Enforce boundaries between investments. Don’t let bonds with creeping correlations to stocks hold your portfolio back. Empower your investments with a healthy dose of true diversifiers, investment strategies that historically lowered risk and increased returns in declining markets.
• Stop chasing diversification for diversification’s sake. Ensure your portfolio has a blend of passive and active investments—stocks, bonds and alternative investments—to be well positioned in all market conditions.

2. Amp up security

Promising a strong America abroad, the president has promised to spend whatever is necessary to empower the military and improve national security.

Securing your portfolio requires a handful of actions that should make you much more than you spend:

• Rebalancing is key. Taking a moment once a year to reinvest your earnings from high-performing assets into underperforming ones balances risk in your portfolio.
• Look for quality. Security is often related to quality. Most people know to ask about the investment strategy and track record. Few go the extra step to find out if the money manager invests in his own strategy.

3. Stay in control

There’s no doubt President Trump likes control over his message. On Day One, he got a secure smartphone and is even keeping his personal Twitter rather than defaulting to the @POTUS handle.

Keep control of your investments by actively:

• Controlling emotions. Both fear and greed rob you of returns. Sticking to a long-term plan and staying out of the fray of day-to-day market movements can help investors do what they instinctively know is right – buy low and sell high.
• Finding the right partner. Whether that be a robo-adviser, a flesh-and-blood financial adviser or a trusted money manager, the average investor would do well to have an expert help them craft a financial plan.

Don’t let events happening around you dictate your financial legacy. Instead, move forward, take executive action and make your financial future great again.

Stephen Scott is an alternatives and hedge fund investment veteran, with more than 25 years of experience in due diligence, risk management and index construction.