Can the ‘Trump rally’ continue?

Before we talk about whether or not President Trump can take credit for this rally, let’s look back at some of the lowest, deepest and darkest days for investors. As I write this we’re celebrating the eight-year anniversary of the end of the “Great Recession” and the beginning this bull market which began on March 9th, 2009. Believe it or not, this bull market is the second longest on record and the S&P 500 Index has surged more than 300% including dividends in these eight years. Corporate America has turned a corner and profits continue to be healthy with valuations at a slight premium to their historical norms.

Due to the recent political climate, clients often ask us if we are in the midst of a “Trump Rally” and if so do we expect it to continue. Since President Trump defeated Hilary Clinton on November 8th, the S&P 500 is up over +12% and still climbing. No matter what one thinks about DJT’s tweets, rants or stance on different issues, the investment world supports his business polices, potential tax reforms and surrounding himself with leaders from Corporate America. For pessimist economists like Paul Krugman who said on November 9th, the day after Donald J. Trump was elected, “If the question is when markets will recover, a first-pass answer is never.”, well they must be dusting off their old schoolbooks to see how they got this so wrong. Yes, folks, not even Trump can kill this long running stock market rally and he may make fiscal decisions that will stimulate the economy more and who knows how much farther we can go.

The lesson to be learned is that no matter what happens in this great country of ours or around the world - wars, oil embargos, presidential assassinations, tech bubbles, terrorist attacks, great recessions and even a Washington outsider being elected president, the stock market has always bounced back. If investors have time on their side, I’m guessing that their portfolios should always recover from any unforeseen incidents. Having time on your side should also prevent you from making any major market moves in your portfolio, as recent events from 2016 such as Brexit and Trump’s election had very short-lived impacts on the downside. Invest for the long-term and you will continue to be rewarded.

We will wait and see if this rally is because of Wall Street’s optimism over President Trump and his ideas. As I often say, in hindsight everything is crystal clear. So for now, let the good times roll and I guarantee investors that there will be a correction, there always is, I just can’t tell you when and how much. But as history has shown, stocks do recover and for investors who need money over the next year or two, they may want to take advantage of these market highs and move what they need to cash or a conservative holding, this way they will have two years to let markets work their way back from any type of a correction.