Stock Talk - Trump 2.0-History Repeats?

Episode Date: November 15, 2024

Tune in to see historical data on stock market performance during GOP sweeps, seasonality trends, and parallels between Trump’s first term and what we might expect from his second. You’ll see a range of charts on topics like market volatility, earnings growth, and sector performance, along with actionable insights for navigating this bullish period in the market. I also preview our upcoming livestream with Troy and Charles on November 21st, where we’ll provide a deeper analysis of these trends and answer your questions live. Whether you’re an investor, client, or just curious, there’s a wealth of information here to help you make informed decisions in the current political and economic climate.   Here's the link to submit questions ahead of the Livestream: https://click2retire.com/post-election-questions   #marketinsights #financialplanning #electionresults #trump2.0   About Chris Perras, CFA®, CLU®, ChFC®, Chief Investment Officer: As CIO, Chris is the lead investment strategist and director of research at Oak Harvest Financial Group. Chris develops the firm's core market outlook, putting his decades of experience and expertise to work for our clients. He hosts Oak Harvest's podcast, "Stock Talk," available on the website with new episodes each week. He completed his undergraduate studies at Georgia Tech, and went on to obtain an MBA from the Harvard Business School. Driven by a desire to maximize his knowledge and skill set, he acquired financial planning and investment management qualifications, becoming a Chartered Life Underwriter (CLU®), a Chartered Financial Consultant (ChFC®), and a Chartered Financial Analyst (CFA®).   Stock Talk is a weekly vlog/podcast dedicated to discussing the Oak Harvest Financial Group Investment Team's perspective on what's happening in the market. Hosted by Chief Investment Officer Chris Perras, each episode brings you our views on stocks, the market, and the economy — with a little education thrown in for good measure. Listen each week and help stay connected to your money!   Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free consultation: https://click2retire.com/Connect   Important disclosures: Content of Oak Harvest podcasts expresses the views of the speaker and is for informational purposes only. Oak Harvest believes that any data, articles, or information cited are reliable at the time of creation, but does not warrant any information contained herein to be correct, complete, accurate, or timely. References to third-party analysts should not be seen as an endorsement of their views or recommendations, and you should do your own research before investing. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast constitutes personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Any specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.

The voters voted, the votes are counted, there was no debate, no arguments, no riots, Donald Trump was re-elected as president in the United States. The end of the day, as James Carbell said in 1992, it's the economy stupid, and the voters voted that way. They voted down Bidenomics in the Harris immigration stance the last four years and were less swayed than most thought on social issues. Troy Charles and I will be doing a live stream on Thursday, November 21st at 6 p.m., focused largely on the potential outcomes in the financial, markets in the economy of a second Trump presidency. There's a link in the description below in case you want to tune in live and ask questions. It should be our normal fun time and I think there will be lots of thoughtful

discussion and great information for investors, clients, and old carvis prospects. I also suggest you go back and you watch my last three videos, particularly the two titled, Will 2024 Echo 2016, what a Trump win would mean for the stock market and economy? I posted that Friday before the election and a set. Second titled Stock Market Hedging Before the Election, Are You Overpaying? Which was done in late October as the media was touting the end of the world scenarios for election day itself. I think both proved rather prescient and show what our team looks at behind the scenes to gauge investor sentiment and positioning trying to strip out our emotions. Given the length of next week's event and our lunch and learn last Wednesday,

I'm going to take this as a quick video and mainly fill it with many charts, historic data, in comparisons to late, 2016 when Trump unexpectedly won. I'm not going to give you too much detail here, as hopefully we'll cover most of this on the verbal side of the charts next Thursday night. First, the political makeup in DC is historically good for your money. A GOP sweep in DC is historically the second best setup for stocks only slightly behind a Democratic president and a GOP Senate. The first two years averaged over 12 percent under a Republican sweep, according to to Fidelity. Here's a table we presented last week with stock market returns under party sweeping the presidency, House, and Senate over the next two years. Contrary to most thinking,

historically, sweeps have not been disasters for the market. In fact, Republican sweeps have been slightly more favorable than Democratic ones. Here's a four-year annual return data compiled by Fidelity. Here's another great graphic from my former employer in Vesco comparing stock returns to each economic growth during the each president since 1950. Investors, your money is green, not red, or blue. We are now in the seasonally strongest period of the year, November through April. Here's the monthly return data of the S&P 500 for the last 15 years. Here's that same seasonal data for the presidential election years dating back to 1928 from Steve Sutmire's Group at Bank America.

Remember viewers, we first discussed this almost a year ago into year-end, 2023 as a bullish setup for 2024 stock market returns. Also, strong first half stock returns usually lead to strong finishes. Here's that data on historically strong first halves and how they've ended. Here's more of that historic data returns in good first quarters from Charlie B. L.O. He always has great stats. This is the data going back to the Great Depression showing the best returns and what happened throughout the year end. Investors, it's very rare to have a down return in the fourth quarter after a strong first

nine months. In fact, only two times out of 19 years have we had returns over 19% for the first three quarters and had a down fourth quarter. That was in 1943 and 1983. History says your money, if invested in the US Stock Market Index, S&P 500, should be treated very well through at least the inaugural ball in 2025. Investors, here's another great chart from 314 research on stock market seasonality.

Historically, stock markets have topped in December or January, not in November. For shorter term traders, here's more trading data from Sutmire's Group at Bank America on the first and last 10 trading days of each month during the presidential election years. I know at least 48% of voters aren't pleased with the current outcome. However, as we've messaged for over the last six years at Oak Harvest, your money is green, it's not blue or red. Stocks move on earnings, more specifically, changes in free cash flow and interest rates. Here's a chart from Lance Roberts on the S&P 500's

earnings and earnings growth rates over time. Over long periods up and to the right, regardless of who's president. Trump 1.0 brought in lower corporate taxes, moderate inflation, stable interest rates, and a higher S&P 500 in earnings in the second half at 2017 and 2018. And stocks and your money loved it. I recall about 12 months after the stock gains, many of those who publicly were anti-Trump suddenly were very quiet and smiling. Why? Because the economy was their net worth was up, and things were calmer in the world for at least the first few years. So what worked in the first two years of Trump 1.0? Let's look broadly at it.

I'll overlay the chart of 2016 and 17 with 2024, year to date in 2025 on the chart the major indexes. First, the S&P 500, then the NASDAQ composite. And finally, what has been a laggard up until recently under the current administration, the Russell 2000 Small Cap Index, which is largely domestic names, more important, and indebted and lots of smaller financial names. So far, it looks to me like history is repeating in the stock market. A few other charts to think about.

Didn't Trump bash China right out of the gate in late 2016 and 17? Yes, he did. And let's look at what most speculative Chinese stocks is measured by the K-Web China Internet index back then. Here's the K-Web ETF chart. An initial sell-off in late 2016 into year end then, up and to the right, all of 2017. And the chart of Bitcoin overlaid then and now. Will Trump 2.0 be different than Trump 1.0, as the doomers are saying,

will democracy end any more quickly under Donald Trump than it was ending under prior presidential terms with orders to waive student debt or allow mass border immigration? I don't know. Investors, the biggest surprise I can come up with for markets in 2025, I mentioned it almost over a month ago. What's that? A collapse and implied spot volatility, the VIX index in 2020.

25, back below 10. Something I personally have said for five years would never happen again in my life. But you know what? Never is a very long time. And history has certainly been repeating the last few years in the markets. I know almost no one can fathom 2025 being less volatile under a Trump presidency than more volatile given what we remember about his first term or the last four years of him out of office. Will volatility go under 10 again in 2025 like it did 2017, which would equate to an S&P 500 of over 7,000 in late 2025? I don't know, but I can tell you it's a secular bowl market since 2011 and a cyclical ball market since the cyclical lows in October of 2022 pointing higher.

This did include a strong bull run-up during the first 15 months of Trump 1.0. Investors still a bull market until it proves itself it isn't, regardless of whether your candidate won last week or not. Hopefully, our team at Oak Harvest kept you from making emotional decisions. based on politics the last five or six years. Hopefully, you're enjoying this bull market in stocks, whether you're invested aggressively for growth or more conservatively for income.

Investors against the nearing decade-long doomer calls from the likes of Jeremy Grantum, Harry Dent, Robert Prector, Jim Grant, and a myriad of retired billionaire hedge fund managers that come on CNBC almost monthly to scare viewers, it's still a bull market, and investors, as Martha Stewart says, at least for investors.

Now that's a good thing. For myself, from everyone at Oak Carbass, have a blessed weekend.