Should we change our investment mix with Trump in office?
Trump’s election in November sparked an enormous market rally – and a flurry of questions from clients:
Should we change our investment mix with Trump in office?
“Investment mix” is admittedly somewhat vague, but I generally interpret it to mean “should we invest more into bitcoin and US stocks,” given expectations that the Trump administration’s policies will tilt towards crypto deregulation and a pro-domestic agenda.
Well, we’ll find out for certain over the next few years (I wish I had a magic crystal ball), and it is certainly plausible that these segments will outperform. But I think it’s important to consider this:
Macro forces are generally much more impactful than policy agendas.
The markets often work in funny ways. We expect one thing and the opposite happens. The feds cut interest rates by 100bps in 2024…but mortgage rates continue to rise?
Back in January 2021, the energy sector was widely expected to tank under the Biden administration, as his team proposed transitioning the U.S. away from oil towards "clean energy".
The complete opposite happened. In fact, the energy sector was the best performing sector of the entire US economy for two straight years in 2021 and 2022 under Biden.
What gives? Sure, Biden’s clean energy agenda likely played a role (albeit not the role that was widely expected). But consider what else was happening beyond the US during this time: For one, demand for energy rebounded dramatically in 2021 as COVID restrictions started to ease. Then, in February 2022, Russia invaded Ukraine, causing increasing oil and gas prices in Europe and around the world to spike.
Obviously, there’s more to it than that. But, in my belief, those two macro events were exponentially more impactful on the Energy sector’s performance than Biden’s clean energy agenda alone.
So here we are in early 2025 with similar context. Will crypto go to the moon? Will US markets continue to dominate and outperform? Possibly. But if history teaches us anything, we could also be in for quite a surprise.
**This blog is for educational and informational purposes only and should not be considered investment advice**