What Effect will a Donald Trump Presidency Have on the Stock Market?
We’ve posted a few Trump stories, here’s one from the Small Investor:
Wednesday morning, many commentators expected the US stock market to fall through the floor after Donald Trump’s surprise victory. Their expected moment of schadenfreude, however, quickly evaporated as the stock market opened and proceeded to go…. up! So, what happened, and what will this mean for the stock market going forward?
Well, the stock market doesn’t like surprises. The difference in the price of a stock between where it is currently priced and where it should be priced in the future, given predicted future earnings and dividends, reflects the amount of uncertainty that people feel. If people were certain that Apple was going to pay a certain amount of money out in dividends over the next five years, the stock would go up in price until the return from the dividend was about the same as they could get from a five-year bank CD. Because they are not certain, however, the price…
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