As Trump thunders, investors watch for rain

Tue Jan 31, 2017 2:49pm EST
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By Ross Kerber

BOSTON (Reuters) - A dizzying stream of market-moving tweets and policy talk by President Donald Trump is finding a hopeful but anxious audience among professional investors looking to make stockpicking great again.

After years of losing ground to index funds, portfolio managers and wealth advisers say Trump's assertive moves, like singling out individual companies, may create a chance to set their investment strategies apart - even if they think some of Trump's verbal assaults are just bluster. "If he’s going to create volatility, we're going to take advantage of it," said Ross Gerber, president of California wealth management firm Gerber Kawasaki Inc.

Professional stockpickers are under pressure to improve returns as investors increasingly turn to cheaper passive investments – redirecting tens of billions of dollars each month.

Trump's pledge to shake up regulations affecting sectors such as finance, autos and healthcare, as well as his promise to cut taxes, could create big corporate winners and losers. That could give active fund managers an opportunity, in theory, to showcase their skills.

"This administration was elected with many people hoping for change, and that's going to upset the apple cart with old losers coming back in favor," said Scott Schermerhorn, chief executive of Granite Investment Advisors in New Hampshire.

So far, Schermerhorn has made few changes to his portfolios, like the Granite Value Fund GVFIX.O. With Trump in office less than two weeks, he is waiting for clearer signs on what new policies will be introduced.

Schermerhorn also said he has talked some clients out of bailing on stocks such as Boeing (BA.N: Quote) or drugmakers after Trump criticized them publicly on Twitter - tweets Schermerhorn said he read as simply negotiating positions.

Gerber has already acted on Trump. After the then-president-elect slammed Lockheed Martin's F-35 fighter jet program as too expensive on Dec. 12, Gerber bought Lockheed shares.   Continued...

Traders work on the main trading floor of the New York Stock Exchange shortly after the opening bell of the trading session in New York January 15, 2016.  REUTERS/Brendan McDermid