There’s a chance that this isn’t the best stock market move ever after an election, but we’ll talk more about that later.
Author and founder of Citrini Research, James van Geelen, was one investor who was ready. From March to November 8, his Trump basket went up 87%, and a market-neutral Trump basket went up 32% during that time.
In a chat with Jack Farley’s Monetary Matters Network, van Geelen said that his basket was different from some of its sell-side counterparts because he wasn’t limited by a bank’s study coverage. He also said that one of the things that made his basket valuable was the signal it sent, which gave them information that wasn’t based on the betting markets and led them to the election.
There were mortgage guarantee companies Fannie Mae (FNMA 16.95%) and Freddie Mac (FMCC 21.27%) in the basket because investors thought they would be privatized, Geo Group (GEO -5.53%) and CoreCivic (CXW -4.72%) because they thought immigrants should be detained, and long European defense companies and short U.S. rivals because they thought European countries would be forced to spend more on defense. People who bet on the basket were short Dick’s Sporting Goods DKS 0.51% because they thought that guns wouldn’t get more popular after Trump was elected.
These stocks were long in the capital markets as well: Jefferies Financial Group (JEF) fell by 0.11%, Evercore (EVR) fell by 2.50%, Carlyle Group (CG) fell by 2.69%, and Piper Sandler (PIPR) fell by 1.16%.
He is thinking about making baskets that can be used right away. “Tax policy and regulatory overhang are the two things we’re looking at,” van Geelen said. “What is every company that Lina Khan, Chair of the Federal Trade Commission, has ever said something bad about? You should probably be long all of those.”
He used that same analysis on other authorities as well. “Coinbase COIN -2.06% is likely to do very well if Trump gets Gary Gensler fired from the Securities and Exchange Commission,” he said.
Van Geelen is a little less worried about the debt under Trump than other people are. One reason for this is that Scott Bessent, a trader for hedge funds and a supporter of George Soros, is likely to be chosen as Treasury secretary. “I think the move in the long bond is a bit overdone because it’s based on a fiscal outlook that may be skewed or too colored by the federal government’s response to Covid and also probably gives Trump too much credit for keeping his promises.”
He also bought Chinese stocks when they went down. “There is almost no chance that we will see a blanket 60% tariff,” he said.
One interesting way to play Trump’s desire for more drilling is to buy companies like Texas Pacific Land (TPL -0.42%), Aris Water Solutions (ARIS 0.91%), Energy Services of America (ESOA 0.00%), Kinetik Holdings (KNTK -2.09%), and Arq (ARQ 0.14%) that clean up the water that fracking companies find when they look for oil and gas.
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