Love him or hate him, it is hard to deny the presidential impact on the stock market. In his first 100 days as President, Trump has now claimed the second most bullish run of any president dating back to 1928. With a return of 9.71%, the only president to have outperformed was John F. Kennedy in 1961.
While we all know that history does not always repeat itself. However, there are many times that it sounds very familiar! If this holds true, we are likely looking at a bullish year. In all three previous instances of monster 100-day market performance each president (Kennedy, Bush and Clinton) logged a bullish year overall. Only Clinton had a small drawdown at his 200-day mark.
S&P 500 Performance Following a Bullish First 100 Days With a New President: 1928 – 2017
As both a trader and an educator, what concerns me is the bias I consistently see people applying to their analysis based on political and social opinions. STOP. Here is the reality – the market does not care. I know, it is hard to believe.
I have watched traders sit on the sidelines from 2009 to 2017 because they were convinced Obama was going to drive us off a fiscal cliff. Whether his policies were right or wrong, if you were sitting on your hands, you missed one of the greatest bullish runs in our generation.
Today, the other half is freaking out. Convinced Trump is going to cause an economic Armageddon somehow, and they are fully exited from their positions. Some have doubled down and shorted the market.
If you feel a pang in your stomach right now, it might be a good time to do a reality check. If you feel a sense of relief or excitement politically, you too may want to do a check in with reality.
Don’t missunderstand – I’m not suggesting you trade blindly bullish. I’m not suggesting you agree or disagree with any political agenda. I am proposing, however, that as a trader you have a couple of critical responsibilities:
- Analyze which direction the market is moving with an unbiased eye
- Chose a correct strategy, including triggers, targets and stops
- Establish both account and trade risk management protocol and follow it relentlessly
This article is an excerpt from the weekly publication called Trade-Ideas. Use this link to enjoy a free, all-access membership to TradeSmart University and download the full version.