From the time he first stepped into office, President Trump had been pointing to the equities bull market as proof of his economic success and the phrase "Trump Rally" was quickly adopted.
Despite the recent stock market plunge, one that saw the Dow Jones decline nearly 2,000 points within a two-day span, the Trump’s rally, believe it or not, still remains intact.
January 26 marked the Dow’s high of 26,616.71, a level from which it had declined by approximately 2,300 points through Monday’s close of 24,345.75.
For the “Trump Trade” to be completely erased, the Dow would have to decline by an additional 6,013 points to settle at 18,332.74—the level at which the Dow closed on Election Day, November 8, 2016.
Take a look at the Dow chart above:
- The red line marks the low during the November 2016 election week.
- The blue box illustrates the distance that the Dow must cover in order to completely erase the Trump rally.
As you can see, the Trump rally is still deep in positive territory, despite the recent declines.
And despite the extreme market volatility that may have shaken up our markets, Trump’s main focus is on the country’s “long-term economic fundamentals,” which he believes “remain exceptionally strong.”
Many experts agree with this view.
But others, like billionaire investor Carl Icahn, have a more ominous outlook.
Whether the market volatility has been affecting you positively or negatively depends on several factors, namely, when you got in, how you are hedged, which assets you hold, and whether you hold any short positions.
The Trump rally may still be intact, but as with every investment, long-term success has less to do with prediction and more to do with prudence and preparation.