Published: May 20, 2017

There is no denying that social, economic, fiscal and political change is afoot. With a new President in office and a single party majority Congress in place, areas that appear bound for change include: 

  • Federal budget spending, with likely increased emphasis on defense and infrastructure and decreased spending on social services, environmental and other “soft” categories, greater deficits and higher inflation;
  • Health care reform, with the process beginning with the House of Representatives voting on May 4, 2017, to replace the Affordable Care Act with a new plan that is sure to change again as the Senate takes up the same issues;
  • Tax and regulatory reform, simplifying and lowering individual and corporate tax rates and reducing burdens on businesses. 


Change for all
These potential changes introduce a heightened level of political uncertainty into the markets, on which Klingenstein Fields Advisors is keeping a close eye. As we have stated previously, the markets are not fond of uncertainty and typically respond with increased volatility. To some extent, resolution of any sort at least gives the market clarity and something to which they can respond. The outcomes for each of these have the potential to affect investment strategy, asset allocation and specific asset class performance. Repercussions of different outcomes are complex and difficult to predict at this point. Our goal, as always, is to monitor the global landscape and help ensure that our clients are well-positioned to benefit from potential opportunities while managing their risk.

Areas that we believe may be affected by contemplated changes include (but are not limited to):

Focus on the Long Term
While we continually evaluate the impact of potential developments, we caution against overreacting to what can turn out to be short-term noise in the marketplace. In the past twelve months, we have witnessed the surprise results of Brexit and the U.S. election, both of which resulted in sharp short-term market downturns. However, both times, the markets recovered and stabilized. We maintain our focus on fundamentals, looking for opportunities to own quality stocks with strong prospects and reasonable prices. Shorter-term event driven market disruptions can often generate attractive buying opportunities.  

Important Disclosures

This material is provided for informational or educational purposes only and should not be construed as investment, accounting, tax or legal advice. Always consult a financial, tax and/or legal professional regarding your specific situation. This communication is not intended as a recommendation or as investment advice of any kind. It is not provided in a fiduciary capacity and may not be relied upon for or in connection with the making of investment decisions. Nothing herein constitutes or should be construed as an offering of advisory services or an offer to sell or a solicitation to buy any securities or a recommendation to invest in any specific investment strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future returns. The views expressed herein are as of a particular point in time and are subject to change without notice. The information and opinions presented herein are general in nature and have been obtained from, or are based on, sources believed by Klingenstein Fields Advisors (“KF Advisors’) to be reliable, but KF Advisors makes no representation as to their accuracy or completeness. Although the information provided is carefully reviewed, KF Advisors cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided. KF Advisors represents two investment advisers registered with the Securities and Exchange Commission: Klingenstein, Fields & Co., L.P. and KF Group, LP. If you are a KF Advisors client, please remember that it remains your responsibility to advise KF Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.