The year 2016 was marked by sizable political shifts that have changed the way we think about volatility and investments.

From Brexit to a Trump presidency, populism is on the rise and so too is “populist investing”. Trust in pollsters to predict election and referendum results has ebbed away, making politics a higher investment risk today than twenty years ago.

It seems investors and news outlets are closely scrutinizing every word Trump says — and maybe too closely. While markets usually react to significant policy changes, markets today are reacting to hastily constructed late-night tweets from the White House. There is even a new app that alerts users when Trump tweets about a stock they own.

The good news is these somewhat alarmist responses to Trump tweets appear short-lived in nature. In early December, Boeing suffered a rapid fall in stock price after Trump put out a negative tweet about the aircraft manufacturer. However, Boeing’s share price went on to reach an intraday trading record high in January as investors reacted to a better-than-expected set of quarterly results.

While political risk is and should be taken seriously, Trump’s lively off-the-cuff statements perhaps need to be taken with a hefty pinch of salt. Knee-jerk reactions to Trump are all too commonplace. The stock market fell in the immediate aftermath of Trump’s election victory only to subsequently stage a strong rally.

What does this mean for the financial markets and retail investors? Advisors will need to quell client anxieties and also adapt to the new realities and uncertainties of the Trump presidency. While some will be quick to buy and sell in a bid to profit from Trump-induced share price movements, investors should try to look beyond the short-term noise and adopt a longer-term investment horizon.

Many industry analysts think Trump’s pro-business and pro-infrastructure policies will boost economic growth and, in turn, boost stock markets. Since Trump’s inauguration, the Dow Jones closed above 20,000 for the first time and the S&P 500 and NASDAQ have also risen to all-time highs. Index funds and ETFs are one option for those investors looking to benefit from rising stock markets.

Nobody of course knows how stock markets will perform this year. But investors would do well to look at the bigger, long-term macro-picture rather than make knee-jerk investment decisions on the back of the president’s 140-character thoughts.

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