Don’t Blame Trump for the Volatility, Blame Hope, Fear and Greed

I spent some time this week going over the transcripts of President-elect Donald Trump’s victory speech in November and his press conference on January 11. I was trying to match Trump’s words with intraday chart patterns of various markets. Specifically, I was looking for the number of times Trump said “buy stocks” and “sell stocks”.

After about an hour, I didn’t find any of those specific references. However, I did see some wicked moves in the stock indices and in some specific stocks. So if you were on the sidelines in November due to the fear of holding positions into the election and you missed the huge rally, or if you thought you had him all figured out and got a little greedy during the press conference on the hopes he would say something bullish to help you make even more money then please point me to the times he actually said “buy and sell”.

If you stand back a little and take a look at the stock market, for example, and if you strip out all references to Trump since November, you’ll see that the market has been primarily driven by our three, old friends, fear, greed and hope.

To his credit and maybe as a surprise to those who like to talk about his huge ego, I can’t recall Trump ever taking credit for the nice returns his win has generated in the stock market, nor did I hear him gloat over the power he demonstrated over the pharmaceutical industry last week when his words triggered a massive plunge in the value of its stocks.

Investors who had confidence in the long-term performance of equities road out the election. Those who decided to stand aside at that time helped the markets post tremendous gains because they chased stocks higher out of the fear they were going to miss out on a major economic gains. Those who continue to hold stocks during this current period of uncertainty over the execution of Trump’s policies may be doing it out of greed and hope.

If the markets do correct from their current lofty levels, investors better not blame Trump for their setbacks. They placed the bets and they have to live with the results.

Currently, in my opinion, there are two types of major players in the market. Those who are 100% committed to Trump and currently sit 100% invested in stocks and those who aren’t committed 100% to Trump and stocks have laid off some risk in the gold market.

So going into the inauguration and the start of Trump’s reign as President, make sure you know where you stand because at some point this year, you are going to be forced to make a decision primarily based on hope, fear or greed, not on what the President says.