The Postelection Rally Is Setting Up an Opportunity Today
Editor's note: Stocks have been soaring since President-elect Donald Trump's victory. However, the myriad headlines about tariffs, trade wars, and civil unrest across the globe have many investors worried.
Marc Chaikin – founder of our corporate affiliate Chaikin Analytics – stresses that you must ignore the noise from the financial media to avoid missing out on moneymaking opportunities right now.
In today's Masters Series, adapted from the December 11 and December 16 issues of the Chaikin PowerFeed e-letter, Marc explains why it's wise to stay invested in stocks today...
The Postelection Rally Is Setting Up an Opportunity Today
By Marc Chaikin, founder, Chaikin Analytics
I realize this is the time of year when most folks are distracted and busy, preparing for the holidays...
How many times have you heard, "Let's circle back to this in January," over the past couple weeks?
It's kind of a "December mantra."
But it's moments like this – when the majority of investors aren't paying attention – that you have the chance to make the financial decisions that will dictate your entire year to come...
That means having the focus and courage to act. But it's hard for many investors to shake just how unstable things feel right now.
You see, recession alarm bells are still ringing in the financial media. Some people even believe that President-elect Donald Trump's proposed trade tariffs will be what finally brings it on.
And no matter how much inflation seems to come down, prices are still at record highs.
Meanwhile, multiple wars are happening overseas that we could be dragged into.
I can't blame folks for thinking that any one of those things could bring this bull market to its knees in 2025.
Put simply, the world is awash in conflicting information right now. It's enough to make your head spin.
But it gets worse...
For example, earlier this year, the Guardian conducted a poll that measured the average American's beliefs about the state of the U.S. economy and stock market.
At the time, 49% of respondents said that they believed that the stock market had gone down in 2024.
The Guardian published an article about the poll results in late May. Even before that, the S&P 500 Index was churning higher. And when the article published, the S&P 500 was already up more than 11% for the year.
By now, it's up about 20% in 2024.
If folks had held that doom-and-gloom mindset all year, they would have missed out on months of massive gains. And like I said earlier, there's still plenty of fear in the air.
I simply cannot conceive of a more financially dangerous disconnect.
Now, just by being a Chaikin PowerFeed reader, I know that you're better informed than these folks. After all, they're about as wrong as it gets.
But it goes to show you how extreme this year's "national distraction" was. As regular readers know, I'm talking about the election and the media circus around it.
Folks, the postelection rally is real...
Investors put $8 billion into U.S. equity funds earlier this month. That brings the cumulative total inflow to a record $450 billion in 2024.
Put simply, the stock market is having a blockbuster year. And it's looking like the election has supercharged it.
That leaves investors with two simple questions... Why is the market soaring? And where do we go from here?
Sometimes, "KISS" ("keep it simple, stupid") is the smartest approach when making investment decisions.
And nothing embodies the "KISS" idea better than the answer to the question of why the market moved higher...
More buyers than sellers.
Demand for U.S. stocks has been coming from underinvested money managers after the election, small investors who are buying call options in record numbers, corporate buyback activity, and the interest from the nearly $7 trillion in money-market funds.
Corporate buybacks will total more than $900 billion in 2024. That's fueled by soaring earnings from tech companies and interest-rate cuts by the Federal Reserve.
In fact, one Goldman Sachs (GS) strategist expects buybacks to exceed $1 trillion in 2025.
Meanwhile, money-market funds saw $123 billion in inflows during the past few weeks. Again, they now have nearly $7 trillion in assets.
The longer the market goes up without a correction, the more likely some of that nearly $7 trillion in money-market funds comes into stocks.
It's also possible that lower interest rates will eventually push that money back into stocks. The Fed approved a 25-basis-point rate cut at its Federal Open Market Committee meeting this week.
That might come as a surprise to some folks. After all, the economy is running hot right now.
Software giants Adobe (ADBE) and Salesforce (CRM) estimate that a record $13 billion-plus in sales were generated on Cyber Monday... causing the Atlanta Fed's GDPNow model to raise its forecast for fourth-quarter GDP growth to 3.3%.
That's some serious growth. And it's no wonder why the market is pushing to new highs.
With "animal spirits" rampant and expectations on Wall Street for a pro-business Trump administration, many investors are tempted to become cautious at these new highs.
But because of the positive supply-and-demand picture for U.S. equities and rising corporate earnings, I'm still in the "bullish" camp. That's where I've been since January 2023.
Again, the S&P 500 is up about 20% year to date.
That's one of the best years we've had since the 1990s. But that doesn't stop the media from trying to confuse people.
If you aren't careful, it will blind you to some of the greatest moneymaking opportunities the U.S. stock market will ever give you. And you could spend the next decade trying to make up for lost time.
Folks, the election is over. But the national distraction isn't.
The media is at it again. We've got talk of crashes, inflation, bubbles, and just about every other scary-sounding financial buzzword you can think of.
But the reality is, big changes are coming to the market in 2025. And you don't want to find yourself "waiting till January."
Good investing,
Marc Chaikin
Editor's note: Marc believes we're headed toward a huge postelection surprise that will soon change everything...
He says your investing success in 2025 depends on a critical decision you must make before December 23. So he recently hosted an online presentation to reveal exactly how you can prepare for this turning point. Catch up on the full details here...