Looking Back From 2029

By Michael Salvatore, Editor, TradeSmith Daily

In This Digest:

• Today marks the historic start to a new era...
• Think about what worked well last time around...
• These types of stocks are your focal point until 2029...
• I’m happy to have been proven wrong on bitcoin...

Today is Donald Trump’s second inauguration...

It’s the first time we’ve seen a non-consecutive two-term president since Grover Cleveland took his second oath 132 years ago.

That’s not near as important as the fact that it’s Trump. I’d like to say we know exactly what we’re in for through 2029, because we’ve been here before... But it’s Trump.

We should take no agenda item for granted... while also accepting that even the most audacious plans have a grain of potential in them.

(Quick note: My colleague Jeff Clark is about to release a new research presentation all about Trump’s 100 days in office. Those who sign up for his free VIP list will immediately get three free trade ideas you can act on today. Details here.)

Top of mind is tariffs. If the U.S. winds up imposing heavy duties on goods from China, Mexico, Canada, and elsewhere, that will have a big impact on multinational companies. Home-grown firms will dodge this obstacle.

With taxes, we can expect the current corporate-friendly policy to continue or even loosen further. That’s great for corporations in general, and it could turn out great for smaller-cap companies that already face large burdens in the form of lending costs, which may be more flexible in an America-first trade policy.

And one third, tricky to pin down factor is deregulation. We can expect to see favorability toward energy firms, and especially those in the oil and gas business. Nuclear, too, should get a boost as both Trump and incoming Treasury Secretary Scott Bessent have shown their favor toward it.

When it comes to tech, however, it’s a lot less predictable. Tesla (TSLA) would seemingly get a fairer deal than, say, Meta Platforms (META), Google (GOOGL), or Amazon (AMZN). The latter three were either directly or indirectly adversarial to Trump in the last election, and the 11th-hour cozying up we’ve seen from those executives may not be enough to spare the ire. Tesla CEO Elon Musk, on the other hand, has captured the ear of Trump like few others have.

All in all, it helps to look back in history and simply look at which areas of the market performed the best during the last Trump term. Whether they were touched by policy or not, investors bought them on the impression they would be – and that’s often just as powerful in the short term.

Understanding this, we may be able to look back on this moment in 2029 and pat ourselves on the back.

Here’s a chart of the major market sector returns from the start of Trump’s 2016 win through President Joe Biden’s inauguration in 2021:

Large caps, tech, discretionaries, financials, and small caps all performed very well under Trump, with everything save for staples and utilities serving up returns that beat the long-term stock average of about 9% a year.

The only loser over the span was energy, though this had much more to do with the pandemic shutdowns than anything else. Even so, XLE didn’t produce much more than an 8% peak return during the period.

What does this show us?

Posturing and politics aside, tech is still a massive moneymaker for the U.S. Trump won’t be so keen to overburden these companies, squashing profit margins and hurting stock returns, when he knows they were so successful in his last term.

Indeed, his appointment of Silicon Valley venture capitalist David Sacks to the position of “AI and crypto czar” to the White House has played the admin’s hand in where it wants to focus its tech attention.

Narrower trends will emerge among this broader trend, but the play remains simple: Find the best tech names, especially in crypto and AI... And ride them higher through what’s likely to be a corporate-friendly presidency.

Recommended Link
Inauguration Day Is Here. Get Ready to Trade History.
Today, Donald J. Trump steps back into the Oval Office, bringing an unprecedented wave of market volatility. Jeff Clark, a veteran trader who thrives in chaotic markets, believes the next 100 days could be the most profitable of your life. In fact, Jeff believes there will be an opportunity to potentially double your money every single week during Trump’s honeymoon period. In just 48 hours, he’ll show you how. Don’t miss out on this once-in-a-lifetime chance to trade history. Register for Jeff’s Free Event Now.

Here’s one great way to find them...

Regular readers know we love Power Factor stocks.

What are Power Factor stocks? Well, the answer won’t surprise you. But your portfolio will thank us anyway.

They’re companies that exhibit two key Power Factors:

1. Strong business fundamentals... that is, strong growth rates in earnings, revenues, and profit margins...
2. And the telltale signs of major buying volume that could only come from Wall Street’s biggest institutions.

Every week here in TradeSmith Daily, we share the most recent Power Factor stocks as determined by our own Jason Bodner’s quantitative rating system.

Jason has distilled these Power Factors into an easy-to-understand score. The closer to 100, the hotter the stock. But the ones down toward 0 are to be avoided at all costs. Here’s last week’s list, ahead of the newest names to drop later this afternoon:

It’s been a while since we’ve seen a true shake-up in the top 10, but that’s what we have before us this week. I recognize a whopping three names in the list above... longtime top-scorer Arista Networks (ANET), online education company Stride (LRN), and biotech company Boston Scientific (BSX), which has spent the last two years turning every dollar into a little more than two.

Weeks like these are exciting. We get a whole spread of new names to look through.

And it’s also fascinating to see a bunch of oil and gas stocks grace the top 10, as well as biotech stocks. That doesn’t happen often.

Like I said, this is last week’s list. Jason’s Quantum Edge Pro subscribers will get the newest names later this afternoon. If you’re one of them, you can keep your eyes peeled on your inbox.

But if you’re not, and want to change that, go here to learn more about what Jason’s quantitative stockpicking system has to offer.

Let’s end by celebrating how right (and wrong) I was...

Friday’s digest was something of a chart party for the SPDR S&P 500 ETF (SPY) and bitcoin (BTC/USD). My take was that SPY would probably go higher, and bitcoin would probably go lower.

As a holder of both, I was happy to be proven right in the former and wrong in the latter. Let’s start on the former:

SPY broke out of the descending channel, and trades just under $600 per share as I write. I’ll cautiously and optimistically reaffirm my target of seeing new highs before the end of the month.

As for bitcoin, well, the head-and-shoulders pattern didn’t take:

There we have yet another very clean breakout and bitcoin making a new one-month high. It will also likely see new highs by the end of the month.

Quick question – did you read this analysis on Friday? Trade these moves? If so, I would love to hear about it whether you agree or disagree with my take... or whether you made or lost money. Write me as always at feedback@TradeSmithDaily.com.

Whenever I bring you these chart-based analyses, I do it in the context of what I learned from my former mentor, Jeff Clark. If you missed our interview on Saturday, he explains where he’s looking for trading opportunities during Trump’s first 100 days in office.

And while our conversation is far from a political debate, Jeff expects them to be The Most Profitable 100 Days of Your Life (if you trade like he does)... because he’s able to set politics aside and trust what his charts are telling him.

On Wednesday at 1 p.m. Eastern, Jeff is giving a free presentation on the topic – save your spot here to hear what a veteran trader recommends now.

To your health and wealth,

Michael Salvatore
Editor, TradeSmith Daily