Post-Election Investing: Riskier Than You May Think

President-elect Donald Trump's honeymoon ended before his administration even began. In the wake of his surprise election victory, the U.S. stock market delivered a second surprise by rallying. But equities have since pulled back, as traders begin to fret about rising inflation and the prospect of turmoil both at home and abroad.

In the holiday-shortened week ahead, Trump's provocative intentions and appointments are likely to stoke anxieties and further weigh on markets. Certain "defensive growth" bets make sense now; we highlight our favorites below. But first, let's look at the growing causes for concern.

Trump shocked the world by eking out an Electoral College victory, with tight wins in "Rust Belt" states that were expected to go Democratic. That said, Hillary Clinton won the national popular vote by more than 1 million ballots, racking up huge leads in the bluest states.

Americans unhappy with the results have taken to the streets in cities across the country, with a massive protest planned in Washington, D.C., for Jan. 21, the day after inauguration. None of this is a recipe for "healing."

Republicans will control the White House and both chambers of Congress, but the bitter partisan divide in Washington will only get worse as Trump appoints hard-right candidates to key positions. GOP leaders also indicate that they want to keep the Senate filibuster, to restrain the new and mercurial president.

Politics aside, fundamental macroeconomic factors don't bode well, either. Warren Buffett once said: "In the short term the market is a popularity contest; in the long term it is a weighing machine." The prospect of a laissez-faire administration got Wall Street's "animal spirits" racing in the immediate aftermath of the election, but that euphoria already is fizzling as traders more clearly weigh the dangers ahead.

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