In a remarkable political feat, former President Donald Trump is now once again President-elect Donald Trump.
Trump has now become only the second president to win two non-consecutive terms (the other was Grover Cleveland), as he thoroughly defeated Vice President Harris last night, both in the Electoral College and the popular vote! Nearly as important, Republicans also “flipped” the Senate while the House of Representatives remains officially undecided. However, given Trump’s sizeable margin of victory and the broad Republican outperformance in the Senate, it’s likely Republicans will win the House as well, ultimately creating a Republican sweep.
I know many of my readers (likely most) are overjoyed at last night’s result. I also know that many are disappointed. I know this, because so many have texted and emailed me expressing jubilance, while so many others have vented their anguish. It goes to show that my readers hold a variety of opinions, and that they take their convictions seriously.
As far as markets are concerned, well, the feeling is unequivocally in the jubilance camp.
Stocks roared to new, all-time highs “the morning after,” with the several notable election winners surging in anticipation of a return to Trump’s policies, which are seen as pro-growth, anti-regulation and anti-tax. Understandably, many readers have asked me if I think the Trump/Republican victory is a “gamechanger” for markets.
My answer is a bit more tepid than some might think, and that’s because while the election results will likely keep the throttle open for a continued rally into year-end, given the extended valuations here and the fact that the market has largely priced in a Trump win in the days leading up to Election Day, we aren’t likely to see a massive move higher in stocks from here.
That said, I love the fact that markets are surging today in anticipation of more capitalism out of 1600 Pennsylvania Avenue, so Mr. Trump and team, please bring that on! What I don’t want you to bring is all of that tariff rhetoric, because that is NOT pro-capitalist. But hey, that’s a topic of many more discussions in the months and years to come.
Now, another series of questions I’ve received here is what sectors are most likely to perform, and which might underperform, given future Trump policies such as tax cuts, deregulation, focus on domestic industries and new trade relationships.
Here, my partners at Sevens Report Research and I think the likely market winners from this policy stance are value-oriented stocks, small-cap stocks, cyclical sectors and domestically focused sectors such as industrials, defense, energy/basic materials, transports and especially banks and financials.
The likely underperformers going forward are the global trade sectors such as tech, communications, consumer discretionary, large-cap growth, China and emerging markets, defensive sectors and large importers. That said, these market segments will likely still move higher given the wider milieu of solid economic growth and pending Federal Reserve rate cuts, but they will also likely lag the aforementioned outperformers.
Essentially, the Trump win and Republican sweep should continue the broadening of the rally we’ve all witnessed since July, where the “rest of the market” catches up with (and outperforms) mega-cap tech and growth factors.
Another set of questions that might be on your mind right now is about any potential market risks here given the new administration and Congress?
One risk is the return of rising bond yields. Rightly or not, the market views Republican control of Washington as negative for the debt and deficits. As a result, Treasury yields are up today, and they’ve been up in anticipation of a Trump win. Until we see the Trump administration ameliorate the fears of rising debt and deficits, this risk will continue.
The other big risk is trade wars. While Trump doesn’t have unchecked powers to levy tariffs, once his administration meets a burden of proof to green light tariffs against a country, then he will have broad and unchecked powers. For example, with goods from China, he does have broad powers. With countries where we already have trade deals/treaties (e.g. Mexico), he does not have broad powers. Still, the risk of increased trade volatility remains, so as investors we need to keep that in mind when making portfolio allocations.
Ok, so here is the real question I know you want me to answer: What is my favorite market segment given the election outcome?
Certainly, stocks are likely to continue to do very well. And as it is regardless of politics, stocks with the strongest earnings growth, strongest share price performance, most bullish technical patterns and the most-bullish “NewsQ,” as I call it, will lead the way. I also think that despite this morning’s selloff, gold is likely to continue doing well, as its store-of-value status, and its proven resilience as a must-have form of “wealth insurance,” holds true regardless of politics.
However, I think my biggest election winner is… cryptocurrencies.
Trump is very pro-cryptocurrency, embracing the asset class while heavily courting the crypto community. I think this is a great thing, because crypto is an unstoppable force driven by demand and technology that cannot be denied or ignored.
Try as they may, and certainly SEC Chairman Gary Gensler has done just that, Bitcoin, Ethereum, Solana, etc., haven’t been stopped, because smart investors know this is the next big asset class for capturing alpha.
For example, in November 2020, when Biden was elected, Bitcoin traded at $13,677. Today, four years and another administration-elect, it trades at nearly $75,000. That’s a massive gain of nearly 450%!
I suspect that no matter how well your stock portfolio or your gold or silver holdings performed, they didn’t perform that well over the past four years.
Yes, that ride has been volatile. And yes, it’s not for all of your money, nor is it for those who can’t stomach the volatility that comes with this asset class. Yet for those who want to be on the right side of investing history, I think you need to embrace cryptocurrencies, and you need to do so now, as President Trump will almost certainly be an advocate.
And to help you navigate the crypto and commodities space as we enter this next era of a favorable political climate, I suggest checking out my new service, Jim Woods’ Crypto & Commodities Trader.
The service is already off to a fantastic start, banking a 156% realized gain in the first six days! And now that Bitcoin is spiking on the Trump win, our holdings continue to surge.
So, don’t wait a minute longer. Learn how to expertly navigate the crypto and commodity waters alongside me, and do so right now, as time and alpha are a terrible thing to waste.
Upcoming Conferences
EconoSummit, Nov. 9-10, Ahern Hotel, Las Vegas: This will be the first investment conference after the all-important Nov. 5 U.S. elections. Mark Skousen and I will be speaking on the impact of the elections on your portfolio; other speakers include political experts John Fund and top economist Sean Flynn, with more to be announced soon. This ticket, valued at $499, is FREE if you sign up for next year’s FreedomFest, set for June (not July!) 11-14, 2025, at the Palm Springs Convention Center in California. To sign up, go to www.freedomfest.com. After you register, you will receive a special code to get a free ticket to EconoSummit. For more info, go to www.econosummit.com.
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A Vote Never Lost
“Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost.”
–John Quincy Adams
The election may have gone your way, or it may not have gone your way. Regardless of how happy or how disappointed you might be, remember that if your vote was principled, it was not lost. Acting on principle is always a win.
Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.
In the name of the best within us,
Jim Woods
