Trump Trades - Revisited 🔍

Author

Owen
November 16, 2024

Welcome to Alternate Universe!

In today’s edition:

  • We review the Trump Trades’ aftermath 😁

  • Job opportunities at recently funded European startups 👇

  • Is gold being replaced by Bitcoin? 🪙

The Crux 🔴

The U.S. election has come to a close.

What continues to amaze me is the staggering amounts of money raised by candidates every four years to fuel their campaigns.

In that spirit, I decided to explore how we could profit from this election.

Back in August, I shared a few trade ideas. Now, three months later, it's time to review the outcomes and see how they played out.

Let’s dive in.

Method ⚙️

Entry date: Aug 2nd at open (original article published on Aug 1st)

Exit date: Nov 7th at close (date of final results announcement)

Basket weighting: equal-weighted across all positions ($1,000 each)

Gold (GLD)

Performance: +9.52%

Exposure to gold could have been achieved through instruments like SPDR Gold Shares (GLD). The rationale for adding gold to a portfolio stemmed from expectations that inflationary pressures, partly driven by Trump’s tariff policies, would push investors toward safe-haven assets like gold.

However, the election wasn’t the sole driver.

Gold has been on a strong upward trajectory in recent years. In 2024, this momentum was fueled by increased central bank purchases, particularly from China and Turkey, as they sought to diversify reserves away from the U.S. dollar. Additionally, heightened geopolitical tensions in the Middle East further boosted gold's appeal as a safe-haven asset, solidifying its role as a key component in uncertain times.

Crypto

Performance: +16.15%

Despite lacking clear guidelines, the crypto-friendly remarks from Trump and his team were enough to spark a rally in the market. Holding Bitcoin during this period proved highly profitable, and diversifying into other cryptocurrencies was also a viable strategy.

However, selling on November 7th would have been premature, as Bitcoin's price surged past $90,000.

Palantir (PLTR)

Performance: +125.78%

Palantir, known for its AI surveillance and data analytics services, stands to gain from increased federal contracts under Trump’s administration. Chairman Peter Thiel, an early Trump supporter, has leveraged his influence within the GOP, including close ties to J.D. Vance from their time at Mithril Capital.

All in all, the least complex trade, turned out to be the most lucrative one.

Financials (XLF)

Performance: +14.36%

The ETF represents all the companies within the financial industry segment of the S&P 500. This includes banks, insurance companies, REITs, and financial services. Deregulation in the financial industry following stricter antitrust policies under Biden is a key tailwind.

The positive performance was also fuelled by other tailwinds such as interest rate cuts, which facilitate capital access for businesses, supporting economic growth.

Oil Stocks (XOP)

Performance: -0.49%

The ETF offers exposure to the oil and gas exploration and production segment of the S&P TMI. Similar to financials, industry deregulation was expected to benefit oil companies, albeit at the expense of the green transition.

However, this trade idea faltered as several factors weighed on oil prices. Crude oil traded lower amid expectations of surplus production in 2025, dampening investor sentiment and curbing the anticipated gains for the sector.

Small Caps (IJR)

Performance: +10.89%

The ETF tracks the performance of U.S. small-cap equities, representing stocks in the bottom 10% of the U.S. equity market by capitalization. Small-cap companies are often favored for their focus on domestic manufacturing, which makes them less exposed to the adverse effects of Trump’s tariff policies on global trade.

Tesla (TSLA)

Performance: +38.17%

Tesla saw a surge in investor confidence as CEO Elon Musk, a Trump campaign surrogate and potential government adviser, benefited from the political alignment. Despite Trump’s indifference toward EVs, Tesla’s pivot to robotics and robotaxis kept its momentum strong.

Musk’s ventures, including Tesla and SpaceX, are also poised to benefit from relaxed federal regulations and less union pressure, further boosting Tesla’s outlook.

It remains to be seen how Musk will juggle his ventures with his new role as chief of DOGE. 🐕

Takeaway

The basket of trades grew over 29% during the 3-month holding period, outpacing the S&P 500's 10.6% gain over the same timeframe.

Personally, I held onto my positions in BTC and GLD.

In hindsight, I missed some key opportunities, such as private prison stocks like GEO Group and CoreCivic, as well as second-order crypto beneficiaries like MicroStrategy.

Hindsight is always 20/20.

Dig Deeper ⛏️

P.S. Liking this issue? Forward to a friend 🧑‍🤝‍🧑

Headhunted 🦅

Recently funded private companies need talent! Scout jobs at recently funded European startups, ahead of your competition. 💪

  1. Kugu 🇩🇪 - The proptech startup focused on decarbonizing the real estate, has closed an €8.5m Series A round. Multiple roles in sales, marketing and tech (link)

  2. Satispay 🇮🇹 - The mobile payments unicorn has raised €60m in funding. Over 50 open positions across all departments (link)

  3. Cogna 🇬🇧 - The startup has raised a $15m Series A to to automate enterprise software development. Hiring in marketing, engineering (link)

  4. ZE Energy 🇫🇷  - The renewable energy producer specializing in Battery Energy Storage Systems, has raised €54m Various open roles available (link)

  5. Agicap 🇬🇧 - The company has closed a €45m Series C to improve software for treasury management. Multiple roles available across Europe (link)

Interestingness📔 

  • The world's largest gold ETF (GLD) posted its biggest weekly outflow in 2 years last week as Donald Trump's victory prompted traders to take profits.

  • $80,000 to $1.12M in 7 days. Thanks to betting on Elon Musk (link)

  • Europe’s Tech Startups Staggered by Lilium, Northvolt ‘Disaster’ (link)

  • What Trump 2.0 means for the Magnificent 7 (link)

  • Ivy League endowments struggle with private market downturn (link)

📚 New to investing? Grab a PDF copy of my ebook here.

As always, the financial disclaimer!

This is not investment advice. I am not a financial advisor. Make sure to conduct your thorough research before purchasing or selling financial products.

PS: The above assessment does not reflect my personal political views.