Stocks to go PARABOLIC Today: FED slash rates again + Trump Victory 🚀 (How to invest now)

Summary

Following Trump's victory, the stock market has surged, with strong performance from small-cap stocks and major ETFs like the S&P 500. While short-term volatility is expected due to new policies and the Federal Reserve's rate cuts, long-term growth prospects look promising, particularly by 2026. Trump's proposed tax cuts and tariffs may boost U.S. businesses but could add to the national debt. Investors are advised to stay consistent, dollar-cost average, and focus on broad ETFs for stable growth, despite the risks of market corrections in the short term.

Takeaways

• 😀 The stock market surged after Trump's election win, with significant growth in the S&P 500, small-cap stocks, and ETFs like QQQM.
• 😀 The market is expected to be volatile in 2025 as the impact of new policies and lower FED rates plays out, but a bull market may emerge around 2026.
• 😀 Trump's proposed tariffs on imports, especially from China, could hurt long-term GDP growth, even though they might provide short-term domestic profit protection.
• 😀 Trump’s corporate tax cuts to 15% could boost earnings for S&P 500 companies, but there are concerns about increasing U.S. debt due to the broad tax cuts.
• 😀 Small-cap stocks are poised to benefit the most from Trump's policies, especially tax easing, and may see significant growth as a result.
• 😀 Dollar-cost averaging (DCA) is recommended as a stable investing strategy, especially in times of market uncertainty and volatility.
• 😀 Trying to time the market is risky; it's more effective to stay consistent with investments rather than waiting for a potential market dip.
• 😀 Even after a market surge, investing now could lead to greater returns in the future as today’s highs may become tomorrow’s lows.
• 😀 Investors should focus on building a diversified portfolio of broad ETFs, especially low-cost ones with lower risk, to weather market fluctuations.
• 😀 Companies with access to capital and the ability to benefit from tax reforms are expected to thrive, especially in the small-cap sector.
• 😀 The overall outlook is for a growth cycle to continue, driven by lower interest rates and business investments, but with some inflation risk.

Q & A

What impact did the election of Donald Trump have on the stock market?

The election of Donald Trump led to a significant surge in the stock market. Investors were optimistic about his pro-business policies, such as tax cuts and deregulation, which they believed would drive economic growth. This optimism resulted in Wall Street rallying to record highs.

What is the expected market outlook for the next few years?

The market is expected to experience volatility through 2025 due to Federal Reserve interest rate cuts, new policies, and uncertainties around Trump's tariff policies. By 2026, the market is projected to shift into a bull market as lower interest rates stimulate growth.

Why is 2025 expected to be a volatile year for investors?

2025 is expected to be volatile due to a combination of factors, including the Federal Reserve's rate cuts, the implementation of new policies under Trump's administration, and market corrections following an initial post-election surge.

What role do tariffs play in Trump's economic policies?

Trump's tariff policies, particularly his vow to increase tariffs on Chinese imports by 10%, could provide short-term benefits for US companies by protecting domestic industries. However, the long-term impact could be negative, potentially reducing GDP growth due to higher costs and trade tensions.

How might Trump's tax reforms affect the stock market?

Trump's tax reforms, especially the proposed reduction of the corporate tax rate to 15%, are expected to initially boost corporate earnings, particularly in the S&P 500. However, concerns about the resulting increase in government debt and the federal deficit could lead to market uncertainty in the long run.

Which types of companies are expected to benefit the most from Trump's policies?

Small-cap companies are expected to benefit significantly from Trump's tax cuts and pro-business policies. These companies, which tend to borrow more and are highly sensitive to tax policies, could see substantial growth due to lower taxes and easier access to capital.

What is the importance of small-cap stocks in the current market environment?

Small-cap stocks are crucial in the current market environment because they stand to gain from Trump's tax policies, which would lower their tax burden and make it easier for them to borrow money at cheaper rates. These factors could drive growth and make small-cap stocks an attractive investment opportunity.

How should investors approach the market in terms of timing?

Investors should avoid trying to time the market and instead focus on consistent, long-term investing. Dollar-cost averaging, where investors invest a fixed amount at regular intervals, is a key strategy to manage the uncertainty and volatility of the market.

What is dollar-cost averaging, and why is it recommended?

Dollar-cost averaging (DCA) involves investing a set amount of money at regular intervals, regardless of market conditions. This strategy helps mitigate the risk of market timing by spreading out investments over time and buying more shares when prices are lower and fewer shares when prices are higher.

What are some recommended ETFs for investing in small-cap stocks?

Some recommended small-cap ETFs include the iShares Russell 2000 ETF (IWM), Schwab US Small Cap ETF (SCHA), and Vanguard Small Cap Value ETF (VBR). These ETFs focus on small-cap stocks and offer diversified exposure to this sector.