The secret to success for trading without major losses is timing, says U.S. Marshall Jeremy E.
Timing like the change in presidential administration, for example. The market reacts to each election cycle, and this current cycle is more formally known as the Trump trade.
He says it’s “not necessarily about picking winners but picking the timing of when to get in and out of particular stocks.” A skill he strengthened over the last two decades and has helped him supplement his income to assist with life events.
When the world’s richest man and Tesla CEO Elon Musk endorsed now-president-elect Trump in July 2024 that spiked volatility in EV stocks. It became clear that he would have influence in a second Trump administration, Jeremy E. recalls.
Almost suddenly, some of Tesla’s most redoubtable competitors like Rivian Automotive stock took a hit as a result of the Trump-Musk alliance. A likely sign of what the EV market at-large and other Trump-favored companies and their rivals are likely to experience under his administration. Rivian fell 8.3% immediately following election night and is down more than 44% year-to-date. Tesla, on the other hand, jumped 14.75% after election night and is up over nearly 80% year-to-date.
“So just kind of foreshadowing that, I kind of jumped out of Rivian,” Jeremy E. said.
Arguably, the Trump-Musk alliance strengthened post-election. Now, Musk has been appointed by President-elect Trump to co-lead a newly formed Department of Government Efficiency that is tasked with achieving exactly what the name states – a more efficient government.
The broader market is on an upswing despite the grim prospects for the EV sector – any brand that isn’t Tesla. The S&P 500 climbed more than 3% the day after the election and is up almost 23% year-to-date. Retail and manufacturers stocks took a hit, as well as bonds, as the market is preparing for Trump’s inflationary tariffs. However, tech, crypto, and bank stocks jumped ahead of what the market believes will be a looser regulatory environment.
However volatile the market can be on any given day, there seems to be a clearer list of who investors think prospective winners and losers are under the new administration as some sectors experienced rallies and others experienced sell-offs.
Although market predictions don’t always pan out.
After shorting the Truth-Social’s parent company, Trump Media and Technology Group stock (DJT), or betting the stock would crash if Trump lost, on election night because he felt there was “far more to gain if the stock went in one direction than the other” Jeremy E. says he took a $4,000 hit on paper. Then he re-ponied up and invested in it for the short term but is still down and is waiting to close it out.
What seemed like a guaranteed pay-day burned a multi-thousand dollar hole in his pocket that he covered with other investments. A testament for why devising a plan for entering the market or any rally is essential, especially for those who don’t have the capacity to lose.
DJT currently trades at almost double what it did at the beginning of the year but only approximately a third of its highest value from 2022. Which means investors who purchased shares at the all-time high of $92 are also likely in the red.
“The reality is that most of the increase in retail trading that we’ve seen since 2020 is by relatively unsophisticated investors,” said professor of Accounting at Stanford Graduate School of Business Ed deHaan adding that he includes himself in the unsophisticated group. However, the rally we saw around the election is a lot of sophisticated traders who are adjusting to a new expected economic reality, he continued.
Politics can be a great indicator for stock performances but like with the performance of DJT may not always paint the full picture of investor confidence. However if you’re trying to beat the market, it’s all about identifying timing. Buying low and selling high. But if you’re trying to simply invest for your future your strategy may be different.
Some steps for identifying what rally or stock, if any, is right for you to take a stake in are:
Clarifying your goals for investing: if you are investing for retirement you may want to stick to broad ETFs and stay away from single-name stocks.
Choose your platform (and investments) wisely: Trading has increased exponentially over the years with apps that have allowed you to trade for little to no cost, those same apps have to make money and they do so by convincing investors to trade as much as possible. Do your research and choose a platform with a low fee
Use an advisor… they can be affordable!: Many platforms have Robo-advisors and charge as low as 25 basis points a year. Utilizing this function may decrease your chance for windfalls and if it creates a portfolio that covers multiple parts of the economy and generates 8-10% return a year you’ll likely be able to retire comfortably.
Money: Budget for investing.
“I think that trading can be a lot of fun. It can be a way to engage with the world but you really need to treat it no differently than you would treat gambling” deHaan said. “You should go into that casino expecting to lose with the money that you don’t mind not having in your pocket when you walk out.”