By: Steve Smith
Whether he’s criticizing Amazon or praising Boeing or threatening an all-out trade war Trump’s tweets can move both individual stocks and the entire market. Today’s investing advice will help you navigate these currents.
Whether those moves will just be temporary or followed up by a contradictory or conciliatory comment from a staff member the tweets have become a new fact of life to contend with in your daily trading.
To navigate this market, it is important to have a strategy for dealing with these tweets. Never before have we had the experience of major U.S. policy being broadcast in a sentence or two directly by the president. It has been going on for well over a year now but the market still isn’t used to this approach. It can be especially upsetting to many because of President Trump’s volatile personality.
Now that we’ve been dealing with them for over a year, James Deporre over at TheStreet offers his investing advice, 3 Tips for How to Trade Trump’s Tweets .
1. Don’t be too quick to buy into the negative spin.
Regardless of how you may feel about President Trump personally, there is little question that much of the media is anxious to put a negative spin on anything he does. The initial reaction to his tweets will almost always be negative. This creates good opportunities for traders that are quick to jump in on a negative reaction to his comments but it is becoming so automatic that the negative reaction doesn’t last for long.
Wednesday we had a good example of how the market discounts the negative spin to a tweet. Despite a very clear threat to bomb Syria, the market shrugged and did a nice job of taking it in stride. It did cause some uncertainty but that was due to the response from Russia, which seemed uncertain about what the truth might be.
2. The market doesn’t care much about President Trump’s personal behavior.
While Trump would be scorned and criticized no matter what he does because that is the nature of politics, he hands his critics easy ammunition with many of his tweets that attack individuals or the “fake media.”
While we may wonder about the political wisdom of these tweets, they have little market impact and may actually be positive, as they show that the president is working on his economic and business agenda and won’t be stopped by other matters. This market has celebrated the surge in business optimism created by Trump and his personal foibles are generally considered a secondary issue. The bears have tried hard to make Trump’s personal behavior matter, but it has mattered very little to the market.