The Market Loves a Trump Presidency
Major U.S. indexes hit all-time highs after Donald J. Trump won the 2024 Presidential election
What goes up must come down… but when?
The stock market saw its best week of the year last week for no reason other than Donald J. Trump’s presidential election victory. Tesla’s stock price skyrocketed 18%, Google rose 6.5%, and Nvidia jumped 6.4%.
Will the market rally continue?
Well, one thing we can be sure of is that investors will be taking profits this week. It’s sort of like a right of passage. When all three major U.S. indexes hit all-time highs, take profits before it wants its money back.
However, there are three reasons why you might not feel the sting of investors selling assets and, instead, see prices continue to move higher:
Consumer Price Index (CPI) numbers will be released on Wednesday, November 13th. If the numbers are better than expected, investor sentiment will likely be high, and stock prices may continue to soar.
Producer Price Index (PPI) numbers will be released on Thursday, November 14th. This data and the CPI numbers give us a more accurate read on inflation. Remember, investors are looking for a decrease in inflation—or an unchanging number at the very least.
Companies like Alibaba, Tyson Foods, and Talen Energy are set to give their earnings reports.
But, if any of those three categories report less than stellar data, you could see a slight decline in your portfolio.
Overall, I would advise you not to be too concerned about the possible downtrend. Since 1980, all three U.S. indexes have seen gains between election day and the end of the year.
So, even if the market selloff happens this week, history says you’ll probably make it all back—and then some—by the end of the year.
Let’s Learn: Intro to Dividends
Whether you’re new to investing or have been around the block a few times, you’ve likely heard the term “dividend.” But what the heck is it?
It comes from the word “divide” and is something big cut into pieces and distributed to a group of people.
On Wall Street, companies take a portion of their big profits, cut it into pieces, and share that money with those who are invested in their company (shareholders).
Not all companies pay dividends. Those that do will distribute your dividends according to a payment schedule. This may be once a year, twice a year, quarterly, or every month.
How much is your dividend payment?
Two factors determine the amount you receive in a dividend payment:
How many shares of the company’s stock you own.
The company’s dividend yield.
Dividends are paid per share of stock ownership, and it’s the only factor you control. The more shares you own, the more money you’ll receive.
However, the dividend yield is not a factor that you, as the investor, have control over. Yields are percentages that the company agrees to pay you.
It’s important to know that yields are not fixed; they’re variable. They are tied to the company’s current stock price, which means they change daily.
Because of this, I don’t believe dividend investors should calculate their ROI (return on investment) based on the yield.
There’s a better way to do it, and I’ll discuss it in detail next week—among other critical information for dividend investors.
Tools and Resources
If you can’t wait until next week to learn more about dividends, here’s a helpful Investopedia link that might tie you over.
Extremely informative!