Money Rehab with Nicole Lapin - Trump Trades: How The Market Reacted to the Election Results

Episode Date: November 8, 2024

In elections, there are winners and losers. But not just when it comes to candidates— it's true of the market, too. Today, Nicole explains the big winners and losers in the market after election day.

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident

that your money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. It is time to start thinking about holiday shopping, and I'll let you in on a little secret. Get everyone on your list something special from Justin Wine. Justin is legit my favorite wine to give and to receive. With a rich history of accolades, Justin produces exceptional wines and is proud to be America's number one luxury cabernet. Since 1981, Justin has been producing world-class Bordeaux-style wines from Paso Robles on California's

Central Coast. As a pioneer of Paso, Justin wines are what put Paso Robles on the winemaking map. Justin offers curated gift sets, library wines, magnums, and even custom-etched bottles. You can personalize the gifts with a custom message, icon, or logo. Go to justinwine.com and enter code MONEY20 at checkout for 20% off your order. Justin offers the perfect holiday gifts for clients, colleagues, family, and friends. If you're looking for a special wine to serve at your holiday table, try Isosceles. That's Justin's flagship Bordeaux-style red blend. Whether you're a first-time wine drinker or a wine aficionado, Justin has a wine for everyone,

every occasion, and every celebration. Be sure to check them out at justinwine.com and receive 20% off your order for a limited time. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. We are three days out from the election. How are we holding up? The stock market certainly had feelings about the day. When it comes to elections, there are winners and losers. Candidates, yes, but also winners and losers in the stock market.

First, the stock market itself was a big winner. Stocks and the dollar both jumped following the election. Here's a clip from another podcast on our network, Trade Like Einstein, where stockbroker Peter Tuchman reports from the floor of the New York Stock Exchange. Peter taped this episode Wednesday morning. Here he is. Everyone on the floor of the New York Stock Exchange is absolutely elated. It is wild and crazy. I have to admit that there is an electricity, irrespective of who you voted for, there is an amazing electricity around the floor about the fact that the election is over, that the market loves it. It's going to be good so far. We are seeing it good for crypto. We're seeing it good for tech.

We're seeing it great for Tesla. We're seeing good for the overall markets. Everywhere you go, there's plenty of green on the screen. That's a good thing. He also taped a follow up episode Wednesday night. Here he is again. This market closed up 1600 points on the Dow. It closed up 100 and change on the S&P 500. The Russell up significantly. A lot of stocks trading easily at 52 week highs.

It's amazing, right? At the end of the day, we're in this together. We need to stay strong and solid and look towards the future, right? In order for us to be the greatest that we are, in order for this market to forge higher in so many ways, for everybody to participate in this rally. Look, at the end of the day, that's what we want.

We want everybody to be participating in this, right? Getting their feet wet, getting involved in the market. It is somewhere you can go, somewhere you can access, somewhere you can make money, somewhere you can create financial income for you and your family, change the narrative, whatever it is, this market is there for you. All the barriers to entry are down.

It's just a matter of educating yourselves, motivating, inspire yourselves. Bing bong, Shotzi, have a great night. And there's the bell, baby. Ring that bell. Boom. And it was an electric day for the market, for sure. Stock futures soared. The S&P 500 had its best day in nearly two years and climbed 2.5%. The Dow jumped 3.5%. The Nasdaq surged 3%. So how much of this surge is this election versus just elections in general? Well, historically, election years have been good years for the market. One study from Fidelity found that markets have had returns averaging 9% in election years

since the 1950s. That success is bipartisan, by the way. If history is any guide, the next few months should be good ones for the market. Also, regardless of whether it's an election year, the holiday season tends to drive a strong stock market as well. Investors actually call this the Santa Claus rally. There's also the fact that September is almost always lousy in the market, leaving stocks with nowhere to go but up. Bond yields are also up, with Treasury yields hitting their peaks for the year almost across the board. What all this means long term is a little TBD, but for now, the Bulls are stoked. One of the biggest winners to come out of this election, though, wasn't even on the ballot. It

was Elon Musk. His months of high-profile support for Trump has paid off. I don't know if it was the millions of dollars, his tweets, or if him jumping up and down on stage in his MAGA hat that went viral did it. But whatever it was, it worked. Not only did he get his guy elected, but Musk has guaranteed himself a seat at the table. Jeff Bezos has been trying to buy that kind of clout for years with his purchase of the Washington Post and a $23 million DC area mansion to stay in while he's in town. But none of that ever translated into the kind of pull that Musk has gotten as a result of this election. Not only does this theoretically help secure Musk's contracts, because remember, companies owned by Musk were promised $3 billion in government contracts last year. It could also, in theory, help smooth things

over between Musk and federal regulators. Trump has offered Musk a new position as the head of the Government Efficiency Commission, which means Musk might soon wield power over the agencies that previously tried to regulate him. The markets clearly love this for him, and Tesla stock rose 14 percent the day after the election. Remember, most of Musk's companies are private, so unless you have millions of dollars in special access, you can't necessarily invest in SpaceX or Neuralink. So as a result, some investors bought Tesla stock as a proxy for investing in Musk's other companies. But he's not the only proxy investment riding on this election. Donald Trump is the majority owner of Trump Media and Technology Group with its ticker symbol DJT. At the beginning of the week,

the share price of DJT was $30.44. The day after the election, once he was declared the winner of the election, DJT hit a record of $44.32. On election day, it had a market cap, which is the value of all of its shares, of $7.4 billion. It also announced revenue that day, and the company had lost $19.2 million on $1 million of revenue. The $7.4 billion market cap cannot be explained by the company's fundamentals or any future earning potential. But as a way to make a proxy bet on the election, support Trump, or just play with meme stocks, I guess it makes sense. Well, as much as meme stocks make sense. Trump or just play with meme stocks. I guess it makes sense. Well, as much as meme stocks make sense. Bitcoin was also a major winner here, reaching over $75,000 in a new high post-election. The crypto community has very much gone all in on Trump, hoping that his general dislike of

regulation would work in their favor. The Biden administration has not been friendly to crypto projects. Trump himself has expressed some distrust of crypto, saying, quote, it's not money, end quote, it's based on thin air. But he also literally ran a casino, so I think it's safe to say that he's fine with people gambling. So who are the losers in the market in the days following the election? Well, renewable energy is a big one, which will come as no surprise. Trump is known for his drill baby drill outlook on oil, so solar stocks plummeted. First Solar, one of the largest solar companies, sank 10%. Now, in the days following the election, there's been this uneasy, uneven feeling. Some people are crushed. Other people are elated. It can be hard to find quiet, calm spots of common ground.

But you know what? We have to because we still all live together. It feels like for the last eight years, about one half of the population has been really unhappy about the direction the country is going in. It flipped sides and we've gone through a pandemic, which was one of the strangest times in human history. I don't know exactly how we do this, but I sincerely hope that in the next four years, we can collectively come to a place of equilibrium where most people feel okay about the overall direction of the country.

I know there will be people who hate this and think it's naive, but that's okay. America is a dream, an idea, and at our best, we should be aspirational. No matter how you feel about the election results, I think we're all united in feeling like there's room for improvement. Everyone has been struggling in this economy, and no matter who the president is, we need to take care of our own little micro economies, which is what I'm here for. For today's tip, you can take straight to the bank. For the so-called Trump trades, the companies that people expect to rally, like Bitcoin and Tesla and oil companies, we may see these stocks climb again around inauguration time. But these stocks also might underperform because the market is very reactive.

So if traders don't see their stocks soaring as predicted, they could quickly exit the trades and the stock will slump. Remember, if you're invested in S&P 500 index funds, you benefited from the jump in oil and in Tesla and all the major Trump stocks that rallied. But if these Trump trades go down, the other stocks in the S&P 500 will buffer your losses then. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes.

Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at moneynews and TikTok at moneynewsnetwork for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.