There is an old French saying that goes a little something like this: The more things change, the more they stay the same.
It is worth keeping that in mind as many pundits attempt to second-guess the impact of a Trump Presidency on our portfolios.
There are some who are far-sighted enough to look at markets through the lens of a telescope. But there are also some, with a vested interest, who enjoy looking at them through a kaleidoscope.
Confusion reins
Who can blame them? Confusion is never a bad thing, if bafflement and obfuscation is their ultimate goal.
But what does the voice of reason, Warren Buffett, think?
After Donald Trump won the keys to the Whitehouse, Buffett was asked for his reaction to the shock result.
The Sage of Omaha said he expects stocks to be higher in 10, 20 and 30 years' time. He added that it would be higher regardless of whether Hillary Clinton or Donald Trump was elected.
That is the kind of calmness and composure we have come to expect from one of the best investors of our time.
Bad television
But that doesn't necessarily go down well on television.
The media would have preferred Buffett to tell everyone to sell everything and head for the hills – or Canada, which is how some in the media had preferred to portray the surprise election of Donald J Trump.
One pundit was especially dismissive of Buffett's calmness, as markets reacted violently to the unfolding events.
He did grudgingly acknowledge that life would go on and that households would continue to buy consumer staples. But he also said it was not very helpful for short-term traders.
And therein lies the problem.
Sleepwalking into trouble
There are those in the market who enjoy making big bold bets without even knowing why.
If they guess right, they could be in line to profit handsomely. But if they get it wrong, they could get their fingers badly burnt.
Investing is not about blindly putting our money into assets without knowing the facts. It never has been, and it never will be.
Investing is about working out the yield on an asset over the lifetime of the asset.
If we believe that the prospective returns could be an adequate reward for the risks that we take, then it should be good enough for our portfolios.
But some traders like playing with fire – just as they did when they bought bonds at the wrong time. They were sleepwalking into trouble.
Defying logic
It defies logic how some investors would buy junk bonds at sovereign-bond rates of return.
It is even more unfathomable how some investors considered lending money at negative interest rates. But many did. They were literally paying borrowers to take their money.
It was always going to end in tears. We just didn't know when it would happen.
And now the tears are starting to flow. So too is money flowing out of bonds and into risk assets. It is reckoned that some $1 trillion has already left the bond market.
Money is also gushing out of emerging markets and into America.
But hold your horses.
Just as money blindly followed money into the bond market, it is now rushing, unthinkingly, into banks and mining stocks.
Commonwealth Bank of Australia (ASX: CBA) shares have soared over 8% higher in the past week. BHP Billiton (ASX: BHP) shares are up 6%, and Fortescue Metals Group (ASX: FMG) shares have jumped 8% higher in the same period.
These are massive moves for such large companies, driven far more by sentiment than by a change in business fortune.
There will always be people who tell you that the rules have changed. They'll urge you to buy gold because this time is different.
It's not. It's never different.
Invest with an appropriate time horizon — as does Warren Buffett — and you'll quickly see through the folly of buying gold, buying bonds with negative yields, and lurching from one investing plan to another.
So, take a look at the ASX and your portfolio through the lens of a telescope rather than a kaleidoscope. You should see a totally different image.
There are opportunities aplenty, particularly amongst dividend-paying stocks, many of which have been left behind in the Trump trade.
Just like last week, last year and last decade, if you buy well and give your stocks the time to succeed, a Trump presidency can indeed make you rich. If nothing else, dividend-paying stocks, especially those of the fully franked variety, will pay you handsomely while you wait.
