Should I change our Portfolio with a new President?

Yes, interesting times may call for interesting portfolio changes! Or not. 🙂

Inspired by a few recent reader questions and a new blogger article I found that I will link to below, here is my quick take on whether I should be making any changes to our portfolio: with a new U.S. President.

Should I change our Portfolio – With a new President?

Reader questions, adapted slightly for the site:

Reader #1:

With a new U.S. administration about to take office on January 20, 2025, it’s easy to imagine things like tariffs on U.S. imports, an overheated U.S. economy, etc. fuelling the rise of inflation.

Thoughts? Should we be using this reality in our investing style going forward? What changes should we consider? Also, with net interest income improving in that type of scenario. Banks seem like a good idea?
Just a thought for a future article.

And…

Mark, I know you’re investing more in U.S. stocks and global stocks using a low-cost indexed fund now vs. before – at least you have written about that for the last few years since the pandemic. So, with the pandemic now over and with the U.S. stock market up so much since 2023, what’s your investing plan when a new U.S. President comes into office? Do you still support that administration and that economy moving forward beyond 2025?

Readers, thanks for your questions. 

Deep subjects and questions! 🙂

And, there was also this recent post from Millennial Revolution:

I’ll unpack a few themes to provide some answers…what I am doing and what I will continue to do.

1. Politics is messy, at best

Like the Revolution article above, although I don’t always get it right (!) on this site, I try to avoid writing too much about politics and/or the broader economic climate including the influence that each subject has with the other since these subjects are far too polarizing. It’s very difficult to have any meaningful discussion online these days…

2. Equity diversification still works

Until my overall investing approach stops working towards meeting my goals, I’ll keep at it.

For new and established readers on this site, you might be aware I’ve mentioned that our investing approach could be considered a “hybrid approach” – a structure that was established about 15 years ago as follows:

1. We invest in a mix of Canadian stocks in our taxable account – to deliver income and some growth, and
2. Beyond the taxable account, while we own a mix of Canadian and U.S. stocks, we own (increasingly) more low-cost ETFs like XAW and QQQ in particular in our registered accounts: inside our RRSPs, TFSAs and my LIRA for extra diversification.

I like the approach, the process and the results.

As a hybrid investor, I just don’t see how I should be making any significant changes to our portfolio for income, growing income, and total growth for the coming years.

When the market is hot, low-cost ETFs like XAW, QQQ and some select stocks in my portfolio run – like Waste Connections (WCN) has in recent years.

YTD the stock is up nearly 30% in my portfolio.

If the market turns bearish, while most stocks will go down in price many blue-chip stocks will still pay dividends regardless of the market correction. The Boards know that shareholders invest in their companies for stable cashflow. Even dividends can be increased in a bear market by some companies. One good example is owning Fortis (FTS) – which has been paying higher dividends for 51 consecutive years through all kinds of market cycles…

I’m trying not to fix what isn’t broken per se. 

That said, I also don’t see the U.S. stock market flying higher, up another 20% for 2025 coming.

Sure, that could happen I guess but 2023 and 2024 have been great investing years coming out of the pandemic for the U.S. so I would expect, at some point, some reversion to the mean will occur. If and when and how much that reversion will be, well, I have no idea…

Just like I wrote back to one of these readers when they asked:

Should we be using this reality in our investing style going forward? What changes should we consider?

I think the U.S. stock market has demonstrated time and again that it is more resilient than any market in the world so I will not change my approach: a mix of CDN stocks and USD stocks for income + growth along with owning low-cost ETFs for global growth, including beyond U.S. for extra diversification….

3. While cashflow is always king for me, keeping cash handy is good too

As the Revolution article referenced, the thing is, anything political tends to become a very polarizing – very quickly. For example, while I didn’t really think Trump would get back into office I also figured he had a great shot returning to The White House given the political climate / where U.S. politics has been trending to including what that party represents, the types of individuals that believe in Trump, what he supposedly stands for and promotes, and so on. That viewpoint can be polarizing to some so I avoid making comments like that too often here…

I do believe this upcoming Trump administration cycle is going to be very toxic and will likely trigger a range of disruptive shifts that impact the stock market including massive deregulation.

Given I cannot predict the political future nor the investing future with any certainty, I will stick with what I know – which includes building a modest cash/cash equivalents’ wedge alongside my existing basket of stocks and equity ETFs just in case things don’t work out at all…

Even with interest rates falling and likely more interest rate cuts will occur throughout 2025, cash ETFs/Money Market Funds and other cash equivalents will be important to keep in the coming years for many DIY investors as a hedge into the unknown.

Should I change our Portfolio – With a new President?

Finally, I believe what Millennial Revolution wrote represents what many early retirees/semi-retirees need – there is a need for steady income, to quote them: “has become much more important to us than capital value”.

“So the first thing we did after the election results became clear is I double checked our portfolio’s yield, FIRECracker double checked our spending projections, and we made sure that our living expenses can be completely covered by our dividends if stock markets end up tumbling in the near future.”

Smart.

With a returning, polarizing U.S. President coming back into his own power in early 2025, we could be in for some major unsettling times in the year(s) ahead.

To settle our own investing nerves when it comes to living through this next major political wave of change, I’m going to focus on a few things within my direct control vs. things outside of my control: 1. sticking to our investment plan, 2. maintaining equity diversification in our DIY mix of stocks and ETFs, and 3. actively preparing for a significant market downturn that will happen at some point.

#3 could be particularly important in 2025.

Onwards and hopefully upwards … for all.

Mark Seed is a passionate DIY investor who lives in Ottawa.  He invests in Canadian and U.S. dividend paying stocks and low-cost Exchange Traded Funds on his quest to own a $1 million portfolio for an early retirement. You can follow Mark’s insights and perspectives on investing, and much more, by visiting My Own Advisor. This blog originally appeared on his site on Dec. 3, 2024 and is republished on Findependence Hub with his permission.