i used to think politics and markets shouldn’t go together.
your portfolio should not be anchored around your opinion of whether or not the person in the white house is good or bad. the truth is that markets go up more often than not regardless of who’s in office.
we have the data to support that claim.
but as i get older (approaching my 40s), i’ve come to realize something incredibly valuable..
i can use politics and markets to my advantage: look for the most irrational market takes on social media and simply take the other side of the trade.
because their process is not rooted in facts, stats, history or anything else that we can count and study. it’s based on opinion.
and most people are wrong in markets. often.
here are the facts..
a GOP president with a Dem congress outperforms the market average over the next six months 7/7 times with a median return of 17.3%.
if you add in the fact that the Dems now control both chambers, the median return jump to 18.6%.
why? it probably has to do with the fact that policy changes out of the white house are now effectively gridlocked.
and if there’s one thing you need to understand above everything, it’s this.. the market is a forward discounting machine. and it hates surprises.
wall street can now more effectively price in the future. it’s that simple.
here’s where it gets fun.
yesterday’s losers may end up being the biggest winners
i’m not in the business of predicting what’s going to happen next.
that’s citrini’s lane. at least until he sold to semi analysis earlier this year (great timing btw, literal top).
instead i’m going to do what i always do.. and that’s watch where the flow of money is going.
here’s what wall street has traditionally bought and sold following the midterms:
semis stand out here to me. they historically have done very well over the next six months.
and wall street has beat the high beta ai and semi trade half to death over the last five months.
semis are down nearly 25% from their june highs. and they’re trading below their 200-day moving average right now.
but they’re up premarket. not enough for me to want to buy yet but enough for me to think about what a bottom may look like.
not everything is responding positively though:
while hyperscalers are bouncing the hardest, probably due to the fact that they will slow down incinerating their free cash flow via capex, the ai data center buildout stocks are not.
the ai energy trade has been slaughtered. and they’re down again premarket as Dem governors threaten a moratorium on new construction in key states.
so.. yeah. historically what just occurred is very bullish. but if you think every stock you want to go up in price is going to go up, you’re in for a rude awakening.
as always, the market will punish those who are underprepared and uninformed.
that’s why it’s the perfect time to freak out and sell everything.
for those of you out there who understand the game is greater than which side is in the white house, i encourage you to check out my new Power Shift service.
take my trades. read my reports. sit in our discord. and attend the weekly coaching webinars. you’ll develop a better understanding of how to beat the market by following the money as it shifts from sector to industry, theme to narrative.. as opposed to being a victim of charlatans who let their political opinions get in the way of making money.
at the end of the day what we do in the markets is a selfish endeavor. unapologetically make as much money as you can. the rest will work itself out.
follow the money,
hamilton
founder, the trading initiative
Let all the haters come