With the stock market pulling a totally unexpected robust rally right after the equally unexpected election of Donald J. Trump as the next president of the United States, many of the large institutional investors have decided not to make any major changes in their portfolios or investment strategy. They argue that the incoming Trump government wouldn’t alter drastically the investment landscape nor the outlook for investing opportunities.
“We don’t expect sweeping changes to our fair value estimates” as a result of the outcome of the presidential elections, says Elizabeth Collins, director of equity research at Morningstar in commenting on the impact of a Trump presidency. That’s because “we have a long-term approach to investing, and we are fundamentals-driven, and we believe in intrinsic value.” she added.
Morningstar uses discounted cash flow models to peg the fair value estimate of every single company it covers, Collins points out. What that means, she explains, is the cash flows that the firms can generate over the next five, 10, 15, 20 years really matter for what we think the firm is worth.” So what happens in the next few days or in the next few years, says Collins, matters not so much to company fundamentals as the long-term course of history and industry supply-and-demand fundamentals.
So you might see a few tweaks here and there to our fair value estimates to the extent that some companies will get their fundamentals get impacted, byt by and large, “we won’t see many material changes to our fair value estimates,” she emphasized.
Gregory Warren, senior equity analyst at Morningstar, also believes that the Trump win won’t change trends in asset management — even if the new administration should roll back the Dept. of Labor’s “fiduciary” rule. He believes such a change “won’t alter the long-term secular trends affecting the industry.”
Indeed, some wealth managers have started to adjust their emphasis on certain stocks in their core portfolios. Predictably, they upgraded some stocks they deem are more palatable to some of the expected policy direction of the Trump administration – what some analysts refer to as “Trump flavored” stocks.
With the stock market pulling a totally unexpected robust rally right after the equally unexpected election of Donald J. Trump as the next president of the United States, many of the large institutional investors have decided not to make any major changes in their portfolios or investment strategy. They argue that the incoming Trump government wouldn’t alter drastically the investment landscape nor the outlook for investing opportunities.
“We don’t expect sweeping changes to our fair value estimates” as a result of the outcome of the presidential elections, says Elizabeth Collins, director of equity research at Morningstar in commenting on the impact of a Trump presidency. That’s because “we have a long-term approach to investing, and we are fundamentals-driven, and we believe in intrinsic value.” she added.
Morningstar uses discounted cash flow models to peg the fair value estimate of every single company it covers, Collins points out. What that means, she explains, is the cash flows that the firms can generate over the next five, 10, 15, 20 years really matter for what we think the firm is worth.” So what happens in the next few days or in the next few years, says Collins, matters not so much to company fundamentals as the long-term course of history and industry supply-and-demand fundamentals.
So you might see a few tweaks here and there to our fair value estimates to the extent that some companies will get their fundamentals get impacted, byt by and large, “we won’t see many material changes to our fair value estimates,” she emphasized.
Gregory Warren, senior equity analyst at Morningstar, also believes that the Trump win won’t change trends in asset management — even if the new administration should roll back the Dept. of Labor’s “fiduciary” rule. He believes such a change “won’t alter the long-term secular trends affecting the industry.”
Indeed, some wealth managers have started to adjust their emphasis on certain stocks in their core portfolios. Predictably, they upgraded some stocks they deem are more palatable to some of the expected policy direction of the Trump administration – what some analysts refer to as “Trump flavored” stocks.
Source: http://www.forbes.com/
