Nimble Investors Win in the Trump Economy
Stock market news has continued to weigh heavily toward politics compared to the usual economic indicators, stock news and even earnings.
For someone seeking to read up on the latest stock market news, this can be annoying.
I understood it during the election and the months following. But now it’s almost nine months after, and eventually reporters will have to report on the actual data instead of political uncertainties.
Here we are at the start of a strong earnings season (so far), and as I browse through many of the financial news websites, they’re still filled with political jargon.
However, these political headlines are stock market news … because they are affecting our economy and your stocks as I write this.
They may not have much of an impact in the long run, but in the short term, they are creating volatility that requires either a strong stomach, or the nimbleness to be able to adapt rapidly.
I take the latter approach.
I have seen a great deal of political impact in my seasonality service, Automatic Profits Alert, where President Donald Trump’s hopes to restore infrastructure spending and fuel U.S. growth have propelled the materials sector higher through a seasonally weak period.
This is the kind of thing that we have to pay attention to as Trump continues to find his rhythm in office.
But political issues aren’t just disrupting recent seasonal trends. They’re slowing our economy as well — at least according to the International Monetary Fund (IMF).
Last week, the IMF slashed the projected U.S. growth rate from 2.3% in 2017 and 2.5% in 2018 down to a tepid 2.1% for both years.
That’s not only a cut to our growth, but it’s a shot to Trump’s ego. He campaigned on returning America to 4% growth. Since then, his promises are returning America to 3% sustainable growth, and the IMF temporarily had increased its outlook for the U.S.
But in Trump’s first two years, the IMF now sees mediocre growth at best, with expectations at just 2.1%.
The Status Quo of the New Regime
This reality of where our growth is versus where our growth is expected to be is evident on a quarter-by-quarter basis when you look at the Atlanta Federal Reserve’s GDPNow forecast.
It’s one that I have written about several times, and it really drives the point home.
These expectations are important because they are basically the status quo of the new regime.
The IMF assumed Trump and the Republican-controlled Congress would be able to swiftly get things done. As we have seen with the health care dilemma, that isn’t the case so far.
So should we ignore all the political news taking over financial headlines?
No. We can’t. Clearly it is having an impact on our portfolios, and it’s something we must continue to watch diligently.
But it doesn’t mean old trends and strategies quit working.
In fact, I have still had a great deal of success even with Trump in office in all three of my services — with solid win rates and consistent gains.
But it has required quick actions in some instances, while it meant sticking to our strategy in others. Together, it required patience and an understanding of what was at risk.
By having knowledge of the strategies I utilize, I’m able to understand which items are going to affect which strategies, and how to navigate the turbulence.
The stock market is very turbulent, so it’s important that you have confidence in how to navigate it, with or without the added political issues.
Chad Shoop, CMT
Editor, Automatic Profits Alert