Hillbent Blog | Who's Buying The Trump Rally: Average Or Exceptional? | Talkmarkets

Who's Buying The Trump Rally: Average Or Exceptional?

Date: Monday, January 9, 2017 2:33 PM EDT

The Trump Rally has overshadowed a lot of reality with regards to US stock markets. However, if you are a marketing genius like him, then being a master at fine-tuning your pitch to the frequency of your audience becomes the art of the deal. This means you can pretty much spin almost any perception into reality.

Marketing and advertising experts remind us all the time that the comprehension level of the average (not to be confused with exceptional or excellent).

American is 8th-grade at best. During his campaign, Trump, like any other presidential candidate, said some things that were grossly exaggerated, inaccurate, or just plain false. None of that really mattered because what people "feel" and "believe" is actually more important than facts and the bottom line is that Trump will be our 45th president. End of discussion.

So er ahem.... Right now, I'm looking at a 20-year monthly chart of the SP-500, which is also one of the leading indicators for the US economy. It is monitored regularly by the US Federal Reserve central bank and included amongst its inputs for determining monetary and interest rate policies. When one takes into account the economic history of business cycles, we have had an unusually long run and to make America great again will require the continued advance of the market. 

(See chart below)

(Click on image to enlarge)

However, the stock market is a different animal altogether. It can move up or down on bullsh*t for a short while, but reality is what sustains its long-term direction. If all you can muster is the intelligence of an 8th grader when it comes to distinguishing the difference between perception and reality, then you will lose, period. For example:

  • At the beginning of the Obama administration, many felt that the US was headed to hell in a hand basket and stood idle on the sidelines or entered late into one of the greatest bull markets ever witnessed.
  • Fast forward 8-years or two presidential election cycles (which, by the way, is more or less the length of any given economic business cycle) and the perception is somewhat akin to "Happy Days Are Here Again". Some people are buying into this Trump Rally, but "these people" are not "those people". All kidding aside, if you truly believe that Trump has the answers, then buy the market. If you beg to differ, then don't.
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