Well There You Have It: Trump Wins

We wrote last week about how Donald Trump’s ascension to the presidency was not the impossibility that many had thought.

Well, we saw last night that the consensus view of pollsters that a Trump victory was an impossibility proved faulty. A Trump election win became reality with yesterday’s vote, and the initial market reaction overnight was overwhelmingly negative. Since the early morning, the market has seemingly shrugged off those concerns as a fall in stock futures turned into rising prices on the day.

We believe the coast is not quite clear yet. This rally feels more like positioning and blind buying of exposure as evidenced by the flows being predominately skewed towards exchange-traded funds (ETFs) today. As such, we believe it is prudent to keep our exposure on and give the markets a day or so to settle out.

There is a market saying on Fed announcement days that seems apropos here. The saying is “fade the first move.” We think that sentiment is deservedly apt today. Again, from a risk/reward perspective, we don’t lose a lot by being late, but we have a lot to lose by trying to speculate on the bottom. That said, we believe Friday would be a more appropriate time to begin to shift our positioning and execute some trades. We will be doing this via a special alert on Friday, so please be on the lookout for it.