For decades, American investors have been encouraged to think long-term. Focus on the next several years, not solely this quarter. Embrace patience while concentrating on high-quality companies with solid management. Diversify and match your financial goals with your risk appetite.
Those principles will be tested under President Donald Trump. His penchant for firing off tweets criticizing public companies can provide some heart-stopping moments for shareholders watching every stock price tick. During last week's news conference, the president-elect said pharmaceutical companies were "getting away with murder." His use of the idiom to castigate drugmakers over the price of prescription medicine sent shares of Merck, Pfizer and Eli Lilly down 3 percent in a matter of 90 minutes. Biotech shares fell 4 percent.
Shares didn't stay down, but the possibility of the federal government negotiating medicine prices does present a potential threat to the companies. It's these Trump takedowns that can scare off investors lacking mettle. Boeing, Lockheed Martin and Toyota shareholders have all experienced similar stock drops thanks to Trump tweets.
This is a new risk for investors. Presidents have used the bully pulpit the presidency provides in many ways but never to single out individual companies to the short-term cost to shareholders. Regardless of what you think about that strategy, the president-elect shows no indication of tempering or muting the characteristics that got him elected.
In the week ahead, as Donald Trump becomes the 45th president of the United States, long-term investors need to look beyond any presidential putdowns and watch for real policy impacting their portfolios.
