Investing based on the Trump administration is difficult because thus far all we know is rhetoric.
However, many ETFs can be utilized to benefit from the areas he has commented on, like XLF for deregulation or IYM to play infrastructure. That said, many of these obvious sector ETFs have already advanced on the noise and could retreat on the clarity of action.
We believe choosing long term strategic investment themes to benefit from this administration will be difficult until the public is provided a clearer picture of his actual policies. So what about short term? It appears social media/Twitter will be a primary medium utilized to convey policy intent. I fear this will likely cause volatility, but not necessarily sustained declines.
That said, inverse and/or VIX oriented ETPs won’t work to mitigate interim volatility due to the cost of decay. Perhaps selectively utilizing XIV or VMIN whenever volatility spikes in reaction to a tweet and capturing the subsequent calming mean reversion will be a powerful strategy for the next four years. Another out-of-the-box idea would be to use SOCL which could benefit by the administrations desire to circumvent traditional media.
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