Articles

By: Costas Bocelli — September 25, 2019

This T.R.U.M.P Trade is Crushing the Market

It’s been a little over 50 years since the Apollo 11 mission launched mankind to the moon.

Costas

And today we're seeing a different kind of "moonshot", one that's sending portfolios past the Van Allen Belt and beyond.

"Liftoff" for this run-up began on November 8, 2016.

And ever since Donald Trump won the presidential election that night, U.S. Equities have been "up, up and away".

The S&P 500 has gained +40% since Election Day and eclipsed 3,000 for the first time ever.

(Click any image to enlarge)

spx

The Dow Jones Industrial Average too is venturing into the new Frontier.

You see, the Dow has made its own stratospheric journey, climbing more than 8,000 points and trading above 27,000 for the first time ever.  That’s a gain of 47% since Trump’s win.

DJIA

Those are above average returns if your portfolio is tied to these two stock market benchmarks, something that's easy enough to do.

Investors can gain exposure to the S&P 500 and the DJIA and mimic their performance through popular exchange traded funds such as the SPDR S&P 500 ETF (SPY) and the SPDR Dow Jones Industrial Average ETF (DIA).

All well and good...

But investors in tune with the “true market” have blown the doors off those “moon-shot returns”.  They've reached for the stars and generated far greater potential returns.

Instead of buying “the market”, investors that have remained focused on the best performing sectors have been crushing the performance of the major market averages.

And where can you find these market crushing returns?

Just look to President Trump!

Or rather, The “T.R.U.M.P” trade:

  • Technology
  • Real Estate
  • Utilities
  • Momentum
  • Precious metals

These five top performing segments of the market have been generating superior returns since Election Day.

Let's take them one at a time.

Technology

The Technology sector has held the top spot in our broad sector relative strength rankings since Election Day.

By far, this has been the best sector to find securities that deliver superior returns.  And until there is a notable change, investors should continue to overweight technology.

Within Technology, the semiconductor industry has been a favored group.  Companies such as KLA Corporation (KLAC) are a shining example of a security that possesses strong traits of technical strength.  KLAC has gained +107% since Trump got elected.

klac

Real Estate

President Trump says he’s a “low interest rate” guy.

And with bond yields coming down, Real Estate has gained the most in term of relative strength buy signals in 2019 as compared to the other ten broad sectors.

Within this sector, you’ll find many high quality securities that possess strong traits of technical strength and distribute a relatively high dividend payout to shareholders.

One such stock is Crown Castle International (CCI), which has gained 60% since Election Day and currently yields 3.2% annually.

cci

Utilities

Utilities are another sector that benefits from a low interest rate environment.

And since the winter correction that began in earnest in October 2018, the Utilities sector has been ranked among the top three in our broad sector relative strength rankings.

This is also a group that is rife with securities that possess strong traits of relative strength and distribute a generous dividend.

Take Nextera Energy (NEE), the parent company of Florida Power & Light.  NEE has gained +82% since Trump was elected and currently yields 2.2% annually.

nee

Momentum

Momentum is not a sector.  Rather, it’s considered an investment "factor".  Value, Low Volatility, and Dividend are other examples of investment factors.

But this year, Momentum has been the best performing investment factor.  And over the past three years – since Trump was elected – Momentum has ranked in the top three in terms of relative performance.

Think of Momentum as an investment strategy that attempts to capitalize on the continuance of an existing trend.

And if there was a trend that’s been a friend to bullish investors, it’s the Enterprise Software industry.  This group has delivered massive returns for investors since Election Day.

An example of a high quality momentum style security is Intuit (INTU).  Intuit is a high growth software company that trades 42 times next year’s (2020) earnings.  But momentum investors aren’t interested in value, their interested in riding huge trends.  The stock has gained +146% since Election Day and continues to make new highs.

Until the music stops, INTU remains a hit at the “Big Mo” party.

intu

Precious Metals

Inflation… Deflation… Negative yielding bonds… QE… Slowing economic growth…

Who knows what really moves precious metals?

But what I do know is that they’ve been on the rise and have been generating outperformance since Election Day.

While Commodities as a broad asset class has been a relative underperformer, Precious Metals is a segment that should be looked with favor.  The price of gold is hitting six-year highs and that’s directly benefited the gold mining industry.

Take Royal Gold Inc. (RGLD) as an example.  The stock possesses strong traits of technical strength and has gained +74% since Election Day.

rgld

Whether you’re a fan of the president or not, the reality is that ever since Donald Trump won the election, “T.R.U.M.P” has been a real winner for investors.

Good investing!

Costas

Costas

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