My blog posts hardly ever delve into politics. Today, however, is an exception. In the wake of Trump’s election victory last night, the pre-markets are rallying strongly. One thing is clear, Trump’s pro-business, America-first mantra resonated strongly with the electorate and that has translated into a strong market reaction pre-market this morning.
Pre-market, the broad S&P 500 is currently up +1.2% and the NASDAQ is up +1.4% while more focused sub-sectors like small cap is up +1.9% and financials (XLF) are up +5.7% (perhaps due to anticipated increased banking activity in a growing “Trump economy”)! Signs of a Fed easing earlier this year combined with stable labor markets, good earnings growth and moderated inflation stoked markets leading up to where we are today.
Other diversifying, but more risky, asset classes have also performed well YTD with gold (GLD) up +33% and bitcoin (BITO) up +55% - not counting today’s large pre-market rally! Fixed income markets have been mostly tame, but core bonds have struggled.
As I have reported most of this year, most D&A clients have been overweighted large cap, high quality, growth equities and been short bond duration; a strategic position that has benefited client performance this year. Most client accounts are easily beating their benchmarks this year.
As I’m accustomed to say, if you ask me where the market is headed, I’ll say ‘Beats me!’ But the anecdotal—and perhaps behavioral—evidence gives us reason for a bullish outlook. For now, this solid strategic positioning benefits clients and aligns with current market conditions. Barring any changes in clients’ goals or needs, we’re sticking with this approach.