Following Trump’s Advice Might Have Made You Richer

Last year, US equity markets had their worst December since the Great Depression. Nothing seemed to work in the markets’ favor in the fourth quarter. There was a looming global growth slowdown in 2019. The US economy was expected to grow at a much slower pace in 2019 compared to 2018. The US-China trade war had a negative impact on market sentiments. The Fed didn’t help bulls’ cause by raising interest rates four times last year. Fed Chair Jerome Powell took a hawkish stance last year, which didn’t please President Trump.

After the markets fell in the fourth quarter, several fund managers including David Tepper and Jim Paulsen saw a buying opportunity. President Trump, who frequently tweets about the market performance and sees stock market returns as a reflection of his performance, also recommended buying stocks. Speaking with reporters on December 25, President Trump said, “We have companies — the greatest in the world, and they’re doing really well.” He said, “So I think it’s a tremendous opportunity to buy. Really a great opportunity to buy.”

Looking at the markets’ first-quarter performance, the S&P 500 (SPY) rose 13.1%. Among the FAANG pack, Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOG) rose 27.2%, 18.6%, 21.0%, 33.2%, and 13.3%, respectively. The Chinese stocks that got hammered last year also posted decent returns. Alibaba (BABA), Baidu (BIDU), and JD.com (JD) rose 33.1%, 3.9%, and 44%, respectively, in the first quarter.