by Brooke Thackray, Research Analyst, AlphaMountain Investments, Global X ETFs
Let’s Talk About the U.S Election, without the politics!
The Trump trade, how long can it go on?
The day after the recent U.S. Presidential election investors defaulted back to 2016 when Trump was previously elected.
Many of the same sectors that outperformed after the 2016 election outperformed the day after Trump was just recently elected. To name a few: small caps, financials, consumer discretionary, industrials and materials. The main focus in the media was the small caps as the sector rocketed up 5.8%. In my October newsletter I discussed how in 2016, investors thought Trump would be bad for the stock market...until they did not. Two days before Trump was elected in 2016, the S&P 500 bottomed and then rallied after Trump was elected. Investors are leaning into the belief that the stock market will have the same “Trump Rally.” I get how some of
Trump’s policies can be seen as good for the stock market, mainly reduced regulation and reduced taxes, but this time around it is not so straight forward.
The seasonal pattern around US presidential elections tends to be positive from a few days before the election, to peaking shortly after inauguration, pausing until April and the re-accelerating into mid-May.
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Copyright © Brooke Thackray
