2 Post-Election Trades to Surge this November
Election Day is here!
There’s a lot of fear out there about the election’s impact on the stock market. But I’m not worried.
I see a certain set of stocks that are going to SURGE in the post-election markets — no matter who wins the presidency.
Today, our mega trends are more important than ever.
This is what’s going to drive stocks higher. Check out my video below and get two incredible ways to invest in the post-election market:
True Investors Don’t Worry About Elections
This week I know everyone is going to want to know what I think of the stock market after the election or on election night. I would tell you to check into Amber’s Market Talk yesterday where we covered this in detail.
Just to give you a sense to what is really going on in the stock market, understand while many people think the stock market and politics overlap each other, the truth is there are much more important things for the stock market than what is going to happen in the election.
That is something I laid out in yesterday’s Market Talk. There’s no need for me to repeat it. Go watch it and then watch this video if that’s what you’re looking for. In this video I am going to focus on what is much more important.
The election is going to come and go and after that the markets will move on to what matters to investors. What matters to investors is what’s going to happen with the companies, their sales, their earnings and what is going to happen with these companies in the future.
A lot of people are focused on these big indices that the financial media like to call “the stock market.” Once again, I am going to refer you to the Iancast on Friday where my colleague Ian and I went through this.
The S&P 500 is comprised of is the 500 largest publicly traded companies in the United States. At this moment in time it has become unrepresentative of the market of stocks.
Instead, it largely goes up and down based on what happens with Apple, Microsoft, Amazon, Facebook and Google. While those companies are important to our economy, when you look at them you understand our economy is so much more than what goes on at these five companies.
People who are focused on the S&P 500 as the stock market, I believe after the election is over they are going to struggle. Everyone knows what my view is on Apple. My judgment is they have stopped innovating.
They are focused on their stock rather than trying to find products that delight people based on innovation and making things better and easier for people. That is the biggest stock in the S&P 500. It represents in excess of 6%.
If Apple struggles, the S&P 500 is going to struggle. Microsoft has similar issues. Facebook, Google and Amazon have far fewer issues. Nonetheless, these stocks dominate the S&P 500.
For many people who just focus on the S&P 500, this is going to be a bit of a struggle.
Small Stocks Are the Future of the S&P 500
Post-election I expect an entire different group of stocks to start to surge higher. That’s where I believe you want to be focused. You want to be focused on where the stock market is going.
Where it’s going in my opinion is into smaller stocks. Stocks that are much smaller. I have gotten into discussions about what it means in the stock market for a stock to be small. Apple, for example, has a stock market value of nearly $2 trillion.
There are in excess of 3,000 stocks and there are stocks that are worth only a few hundred million dollars. At this moment in time, I believe those stocks represent better growth, better opportunity, better innovation and a better bet on the future based on all the things we talk about week in and week out at Bold Profits.
Innovation, megatrends and all those things like IoT, blockchain, AI, precision medicine, space — all of this is captured in much smaller stocks. I believe when you look back one year from now, three years from now or on an election day four years out, you will wish you were in completely different things and types of investments than what is currently dominating the S&P 500.
In the Iancast last Friday, Ian and I talked about the equal-weighted S&P 500. Just to give you once again what this is, the S&P 500 is cap weighted. Cap weighted means the biggest company in terms of stock market value, which is Apple, has the biggest weight at 6%.
The second-biggest weight is Microsoft, also around 6%. Then you have Facebook, Amazon and Google, which take up 12% or 13%. In other words, you are getting very little of the remaining 495 companies. Five companies represent nearly 25% of the S&P 500 cap-weighted index.
495 companies represent the remaining 75%. So how can you get access to those other 495 because those are the smaller companies, the better opportunity, the better growth. How can you do it? You can do that by owning the equal-weighted version of the S&P 500.
Equal-Weight the S&P 500
What is the equal-weighted version? It means instead of having nearly 7% in Apple, Apple has as big a weight as any other small company. Since there’s 500 companies in the S&P 500, Apple has an equal weight to all the other companies. So does Microsoft. So does Amazon, Facebook and Google.
If you want to get much better exposure to all those smaller companies instead of having all this weight in these big companies, you have an equal weight. You get equal access to all 500 stocks instead of getting 25% access to five stocks and the remaining 495.
If you are thinking there must be other ways to play trying to catch on to better growth companies, innovation companies, smaller companies, yes there is. There is an ETF that really captures 2000 of the smaller companies in the United States. These are much smaller than $2 trillion.
The vast majority of these companies have stock market capitalizations well under $3 billion. In other words, they are tiny compared to the Apples, Microsofts and Facebooks. If you want to get into these types of companies you can get into the Russell 2000 ETF which has the ticker symbol IWM.
These are two different ways to avoid the domination of the five big stocks that no longer represent the market of stocks or the U.S. economy post the election. Final thing to say, if you are looking for our view on the election, check in Market Talk from yesterday where we talk about the election.
Today I am telling you, once the election is over, where you want to be. I believe you want to be in smaller stocks, better growth stocks, better opportunity stocks. We have given you two ETFs where you can benefit from it.
We would also tell you you can get this kind of laser-focused America 2.0, megatrend exposure, Fourth Industrial Revolution exposure, by subscribing to our services. Profits Unlimited is my flagship newsletter that goes from between $49 and $99, where we are laser focused on these opportunities.
Until next week, happy investing!
Editor, Profits Unlimited