Wednesday, November 9, 2016

Why Trump Won

Very low voter turnout.  Trump's voter base was far more passionate and likely to vote than Clinton's.  I don't think the polls were that wrong, it was that they didn't measure how likely a Trump voter or Clinton voter would go out to vote.  Since both candidates were unpopular, I totally underestimated the low voter turnout factor, which favored Trump.  These polls have a margin of error of 3-4 percent and that margin for error is needed to account for things such as low voter turnout and the "silent majority".  There indeed was a shy Trump supporter thing going on.  The urge for change was too great for Clinton to overcome.

As I stated before Trump would be considered stock negative and bond negative, and that is what we have.  More bond negative than anything else, especially the long bond.  It seems like Trump is scaring bond investors much more than stock investors.  His infrastructure spending talk and his well known desire to cut corporate taxes have a good chance of passing through a Republican controlled Congress.  I wouldn't say that kind of fiscal stimulus is wildly stock positive because it is accompanied by higher interest rates.

Judging by the open, the S&P has only given back part of the Monday-Tuesday rally.  It is clear that there are a lot of people in cash who need to deploy it regardless.  And some of that bond money will go to stocks, because cash these days always burns a hole in an investor's pocket.

I will be selling most of my long today and go back to just observing what goes on.  At these levels, I am slightly bullish so not enough to hold a full position.  I will be waiting for an opportunity to get long bonds if we see a further selloff later this year, perhaps to 2.10% area on 10 year yields.


Anonymous said...

TrendRambo: I have done my research just like with Brexit. It was an obvious Trump victory with wide margin. Globalist democrats cheated millions of votes but still could not pull it off. These flaws will be taken care of later. The real bull market is on now. I will by dips and will have rare shorts. My prison stock holdings $CXW $GEO up 20 - 26 % respectively.... I like your input by the way!

Market Owl said...

Thanks. Your call on Trump was spot on.

Anonymous said...

TrendRambo": Trusted this person. He has the best insight : @mitchellvii on twitter