Trump Trade Will Break in 2017
Stock-Markets / Financial Markets 2017 Jul 07, 2017 - 06:17 PM GMTBy: Adam_ODell
The first half of 2017 is over… and, boy, was it one for the history books!
American politics dominated the global discussion, as speculation ran rampant over who would emerge as the winners and losers of a Trump presidency.
Surprisingly (or not!)… the media’s storylines have likely led naïve investors into some of the worst-performing investments so far this year.
Essentially, everything that was up “huuuuge” from Election Day through year end… is now lagging behind. And everything that struggled to digest the reality of Trump’s win… is now leading the pack.
I’m taking some snarky enjoyment in the confusion of the masses.
For one, I’ve told you often that reading the news is the worst thing you can do for your investment portfolio.
And when you look at the performance of my research trading services – Cycle 9 Alert and 10x Profits – you can see plainly how my simple, systematic approach to investing is far better than taking tips from CNBC.
My Cycle 9 Alert readers are averaging a 41% profit, per trade, so far this year. We’ve capitalized on a number of “odd” opportunities, ones that flew in the face of the media’s storylines.
My 10x Profits readers, too, have killed it in this crazy market. By trading what I call “volatility booms and busts” – which we play with just two ETFs – we’ve milked a 20% profit from the market’s wild swings.
Both of my strategies are highly flexible, being “tactical” and “short-term” in nature.
Let me show you why that’s been particularly helpful this year…
Trump’s bravado, essentially, led everyone to believe that the United States was about to take over the world (as if we aren’t already top dog).
That expectation can be seen clearly in the performance of major markets, between Trump’s November 8 election win and the end of 2016.
First, the U.S. dollar soared. It gained nearly 6% in under two months – a huge move for a major currency. All other global currencies were down over the same time.
Second, anticipating the 3% to 4% GDP growth Trump had promised, U.S. Treasury yields jumped more than 30%. That sent U.S. Treasury bond prices more than 8% lower.
No one was interested in safe yield. Instead, everyone piled into U.S. small-cap stocks, which gained a whopping 14% in two short months.
Meanwhile, global markets got left in the dust during the first two months of the so-called “Trump Rally.” World stocks gained a measly 1.3%. Emerging market and Chinese stocks lost between 5% and 6%.
And Mexican stocks, with all that “wall” talk, got crushed like maize in a tortilla press. They lost 16% in the wake of Trump’s win!
There was one foreign beneficiary of Trump’s rhetoric. Russian stocks gained almost 18% in sympathy with the cozy relationship that was, at that time, budding between Trump and Putin.
But outside of Russia, U.S. markets completely dominated global markets in the immediate aftermath of Trump’s win.
And then, in 2017, that trend completely reversed.
Year to date…
The U.S. dollar is down more than 7%. All foreign currencies are positive.
U.S. Treasury yields are falling, with 3-4% GDP growth looking unlikely.
U.S. small-cap stocks are up just 4%, while emerging markets are up 16%.
Oh, and Mexican stocks… they’re up 24% this year – the best of the bunch.
And Russian stocks… they’re down 12% – the worst of them all.
What an epic reversal of fortunes, right!?
Clearly, investors bought the media’s initial storylines – “hook, line and sinker” – in the immediate aftermath of Trump’s election. And, indeed, hopping a ride on the early stage of that Trump Rally was quite lucrative.
But any investors who stubbornly stayed invested in those trends have been sorely disappointed in 2017.
Everything that was working in late-2016… is now broken. And everything that was sucking wind… is now leading the pack!
And if you learn nothing else from this, I hope it drives home the point that this is not a “buy-and-hold” market we’re in.
Yes, the bull market is alive and well (for now).
But you can’t just buy anything… nor hold it indefinitely.
Instead, you should be looking to use simple, “tactical” strategies – ones that position you in the strongest markets at any given time… ones that get you in and get you out, with handsome profits, before the market reverses.
Oh… and stop reading the news!
Adam O’Dell
Copyright © 2017 Adam O’Dell - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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