Trump is president...how can we make money?

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banker22
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Trump is president...how can we make money?

Post by banker22 » Wed Nov 09, 2016 1:57 am

Gold only up c.3.5%...could have further to run? I recall some banks forecasting 1800 in the event of a trump win.

Would be good to hear everyone's thoughts.

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BRUTE
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Re: Trump is president...how can we make money?

Post by BRUTE » Wed Nov 09, 2016 2:04 am

btc up 4%

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bryan
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Re: Trump is president...how can we make money?

Post by bryan » Wed Nov 09, 2016 3:34 am

Woah. I thought the election is in December?

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Re: Trump is president...how can we make money?

Post by IlliniDave » Wed Nov 09, 2016 4:11 am

Beyond the short-term Trumps economic policies, if he succeeds in implementing them (not overly likely), would be good for US stocks in the medium haul, so I plan to buy if there's a few irrational days of panic and we see a drop of 5% or more. Otherwise, my plan is to continue to be the dumb money and stay the course.

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vexed87
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Re: Trump is president...how can we make money?

Post by vexed87 » Wed Nov 09, 2016 4:25 am

I'll be buying some USD with my GBP fun money if it falls and the timing is right, what with the pound doing so poorly since brexit referendum. The world reserve currency has to keep going up, so I assume that any significant drops are short term in nature.

Also, bit late for you folks, but I made a £100 bet in the summer that Trump would win, hopefully this friend is good for the money and I'll be collecting my winnings soon. :lol:

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Dragline
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Re: Trump is president...how can we make money?

Post by Dragline » Wed Nov 09, 2016 8:56 am

Well, the immediate uncertainty will increase volatility -- probably a good time to sell covered calls on your stocks -- but I would think everything would overshoot upside or downside in the next few months while everybody speculates.

If he implements his plans for tax cuts and more spending, gold should do well like it did under the second Bush. And buy whatever industries benefit from the spending -- likely the usual GOP favorites of defense and energy; I'm expecting a pork festival of spending and targeted tax cuts to favored industries actually. I don't think Trump will care about what's in legislation as long as it makes good press.

I'm not so sure about the dollar, though -- it becomes less desirable if global trade declines and there is more deficit spending.

Edit: Looks like healthcare and pharma stocks are expected to benefit, too (judging by the diversion of those from the rest of the market right now), probably because the threat of regulation on prices for drugs and healthcare will be reduced.
Last edited by Dragline on Wed Nov 09, 2016 9:31 am, edited 1 time in total.

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Chad
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Re: Trump is president...how can we make money?

Post by Chad » Wed Nov 09, 2016 9:09 am

Shame the big crashes signaled in the futures market and the Japanese market didn't materialize. That could of been one way to make money. There still may be some specific stocks that get hit hard initially.

One possibility is the tech companies with huge piles of cash overseas. It seems like a forgone conclusion that the corporate tax rate is going to be reduced, as both candidates supported it and now one party controls the Presidency and Congress.

The possible downside for tech companies is the giant knowledge gap concerning tech that will be moving into the Executive wing. I'm not even sure Trump had a computer in his office previously, so they could stumble and hurt tech with some poorly thought out decisions.

The difficult part is actually determining what Trump will do with anything, as it's not like he had a detailed plan for anything.

I'm sure there are other opportunities, but I haven't had a chance to think too much about it, yet.

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Re: Trump is president...how can we make money?

Post by 7Wannabe5 » Wed Nov 09, 2016 9:32 am

Construction?

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Re: Trump is president...how can we make money?

Post by jacob » Wed Nov 09, 2016 9:33 am

Bricks and other wall-building materials, obviously :-D

I was about to post how today would be a chance for 100% TSM folks with only a few years experience to see what Q4 2008 felt like. At some point, we were looking to open with a 5%+ drop which IIRC would not be anything anyone has seen for the past 8 years.

Otherwise, I only have some loose observations given that we don't really know exactly what the policies will be. There are some indications:

Trump is somewhat of a mercantilist (zero-sum mindset i.e. winner+loser = 0) and he doesn't like free trade agreements, so I'd consider that anything that crosses the border in either direction could be hit with tariffs or retaliatory tariffs. The US net imports consumer goods. This means that either Walmart et al prices will go up for consumers or Walmart et al profits will go down. The US net exports capital goods (big machines like airplanes) which would be harder to sell. Also, anyone who crosses the border illegally, which as far as I understand means food and construction. This means either that either those costs will go up for consumers or that domestic labor will now find openings at low wages in construction or apple orchards, slaughterhouses, etc. On the tariff flipside, China has us by the balls because they pretty much sit on most of the world's supply of rare earth metals which is crucial for high tech (LED screens).

Also somewhat of an isolationist. This one is tricky. It may be that military spending will be going down as the US starts playing a smaller and less adventurous role in the world. Weapons are a huge part of the US economy. Note how Guam voted.

This would also mean that the USD would be worth less. Finally a chance to boost interest rates. This should be good for the financial sector. Energy-wise, if the Carter doctrine is abandoned, shale will make a come back. Expect more natgas. Interestingly, this would reduce US CO2 emissions (but probably increase global warming because of the methane losses). It would also reduce overall US growth (because energy will be more expensive with oil prices going back up to $75-100/bbl+ territory...and it's tough to run a consumer economy on those prices).

Trump has talked up infrastructure. So think earthmoving companies (CAT, DE, CMI, ... ) or big technology for grid (GE).

Health care. Very tricky. If ACA gets rolled back, people will be stuck with high premiums for a while because I doubt people with pre-existing conditions who are now in the plan can be kicked out again. Ceteris paribus, this seems like it would be bad for the insurance industry.

TL;DR - Tough to say. All I really have is some idea of a potential direction for various sectors. In the short run, some of this could already have been baked in and what we'll see is a countermove as we now have more certainty.

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Re: Trump is president...how can we make money?

Post by jacob » Wed Nov 09, 2016 9:57 am

The first twenty minutes of action seems to confirm much of the above.

Drug companies are going gangbusters (they're pretty much responsible for keeping the indices afloat).

Insurance is up. This suggests they're expecting that increased drug costs can be pushed onto consumers.

Weapons are actually up (I don't understand that. It was my impression that HRC was the hawk.)

Banks are way up while RE and utilities are way down suggesting that higher interest rates and a lower USD are coming soon.

Oh yeah, and prisons are WAY WAY up. Guns are way down. Ammo is neutral.

Quick overview: https://finviz.com/map.ashx (lets just say that it has never looked quite like this before during the years I've been looking at it)

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Re: Trump is president...how can we make money?

Post by jacob » Wed Nov 09, 2016 10:22 am

TWTR is up 8-)

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Dragline
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Re: Trump is president...how can we make money?

Post by Dragline » Wed Nov 09, 2016 10:26 am

jacob wrote:
Weapons are actually up (I don't understand that. It was my impression that HRC was the hawk.)
Trump is likely to sign whatever the new Congress puts in front of him if it has an attractive label and makes a good photo op, and it will likely include increases in military spending to go to select districts and weapon systems (as usual), whether the military wants them or not.

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Re: Trump is president...how can we make money?

Post by jennypenny » Wed Nov 09, 2016 10:38 am

jacob wrote:Weapons are actually up (I don't understand that. It was my impression that HRC was the hawk.)
I would say it's because of Trump's relationship with Sessions. He'll give Sessions a blank check.

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Re: Trump is president...how can we make money?

Post by jacob » Wed Nov 09, 2016 11:56 am

Increasing momentum in (in order of boost): prisons, drug companies, wall street, health insurance, construction, weapons, and oil&gas exploration.

Today's negatives are utilities, tech, real estate (hospitals in particular), and consumer goods. Also bonds (slightly).

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cmonkey
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Re: Trump is president...how can we make money?

Post by cmonkey » Wed Nov 09, 2016 12:02 pm

Defense is up due to the Republican sweep most likely, even though Trump is isolationist. I'm not sure why insuranace is up since the Republicans are probably going to target the ACA. Maybe just because more uncertainty.

In any event, I went from up .001% to being up 2% now.

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Re: Trump is president...how can we make money?

Post by jacob » Wed Nov 09, 2016 12:07 pm

Insurance is up because expected regulation (e.g. single-payer) probably isn't coming after all/the market expects that the companies can pass costs onto consumers.

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Re: Trump is president...how can we make money?

Post by jacob » Wed Nov 09, 2016 1:41 pm

In consumer goods, trends have begun to filter out. (The rest of the market is unchanged.)

Food companies are hurting (see above). Car companies are also hurting, but I think that's more due to GM cutting down on their production facilities along with associated spill over.

Walmart et al have turned around and are now neutral. So is tech. Communications is doing slightly better which is kinda weird since they usually act like yield instruments (all other yielders are down today).

Strangely, packaging materials are doing well, but amazon is not. Are people busy buying up moving boxes to go to Canada? :-P

Anyhoo ... most changes seem to be baked into the repricing by now. The indexes didn't change much externally, but internally, the shifts have been huge, pretty much reflecting a transition from an expected continuation of progressive policies to a government dominated by a strong Republican political mandate.

That food/retail is down/neutral suggests that CPI is expected to remain tame and that these companies will eat the higher production costs.

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Re: Trump is president...how can we make money?

Post by cmonkey » Thu Nov 10, 2016 11:48 am

jacob wrote: internally, the shifts have been huge
This is the first thing I noticed. A little less than half of my holdings were up 6-10%. About half down 3-4%. The rest sat out. A huge shift of money! Some reasonable gains as well.

I have been trying form a picture of where we are at over the last 6-12 months and have a decent idea of where to put money if I'd like to get some gains. But as suggested, it looks like a lot of the gains are either already baked in or they will be soon. Financials, industrials/materials, consumer discretionary, and healthcare were my top picks (in order) even weeks/months before the election, but as you can see they have all shot up. I'm left wondering if I missed the boat. Hrm. Maybe I should take it as an indication that I'm "learning in the right direction".

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Re: Trump is president...how can we make money?

Post by George the original one » Thu Nov 10, 2016 12:37 pm

Treasuries spiked, too.

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Re: Trump is president...how can we make money?

Post by jacob » Thu Nov 10, 2016 1:27 pm

Turns out it wasn't completely baked in yesterday. Today is more of the same in several sectors although a few are unch and one reversed.

Banks: Doubles up on yesterday. Party on Wall Street.
Drugs: Now neutral
REITs: Now neutral (except health facilities)
Utils: Still down
ShaleGas: More up
Cars: Reversal (remember, yesterday was due to bad news)
Construction: More up
Food: Down again (restaurant and farm "HR departments" are scrambling?)
Tech and telecom: Down (probably more due to bad news coming out of Foxconn today)

DJIA setting new highs. Also USD is up.

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Re: Trump is president...how can we make money?

Post by jennypenny » Thu Nov 10, 2016 1:49 pm

I can't believe banks are up so much. Wasn't Clinton supposed to be good news for banks too?

The banks always win.

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Re: Trump is president...how can we make money?

Post by jennypenny » Thu Nov 10, 2016 1:59 pm

Munis also look pretty attractive.

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Chad
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Re: Trump is president...how can we make money?

Post by Chad » Thu Nov 10, 2016 3:12 pm

Yeah, I bought some Wells Fargo very close to it's recent bottom and I'm doing well the last few days.

Agreed on munis. Had a whole bunch of price target alerts fall yesterday and today on muni ETFs.

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bryan
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Re: Trump is president...how can we make money?

Post by bryan » Thu Nov 10, 2016 3:26 pm

well it's hard for me to pull the trigger on things at the moment. I look at some attractive picks and then fear the "big one" that might come eventually. My current portfolio (probably closest to Ivy) was up 4% over S&P in the last year until right before the election (though it doesn't count my Bitcoins; just waiting on a Bitcoin ETF to come out so I can track it manually in all these websites). Post election it looks like I'm back to only up 1%..

My general thought is shifting stocks from US to international. Look more into currency trades (short dollar). Consider some individual plays or sectors like BIDU, CCJ, GE/BOTZ/VIS.

Banking is surprising. My guess is they are planning to somewhat Burn & Loot the public/government. The only thing they fear, I think, is stuff like Bitcoin (so they are in the early stages to join that movement and adapt).

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Re: Trump is president...how can we make money?

Post by jacob » Thu Nov 10, 2016 3:54 pm

I'd recommend anyone who is interested in more discretionary (meaning not full/blind-market) investing to check into a heat during closing for the next few/several days. Usually these kinds of lessons take more longer to learn while having a much higher noise/signal ratio. Currently, investors are getting full-value (ha!) for their educational dollars.

https://finviz.com/map.ashx

However, make sure you're not getting fooled by individual company or event news, so if something turns out unexpected, go to that company and see if there was a major announcement for the given day.

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