Buying a "Trump 2.0" Stock Today
This one has been on my watchlist...
It's a new day in Washington D.C.
President Trump was sworn in as president yesterday. It was a who's who of attendees, including Elon Musk, Mark Zuckerberg, and Jeff Bezos.
Naturally, I had a lot of people asking which stocks would perform best under a Trump 2.0 presidency.
And while we have touched on this topic before, it's a good time to revisit it.
As one stock from our watchlist is in the "buy zone."
A Weaker Dollar is Coming
Trump's new Treasury Secretary, Scott Bessent, is a market veteran who understands the intricacies of global economics.
Having cut his teeth at Soros Fund Management (along with Stanley Druckenmiller), Bessent knows the powerful ripple effects of currency policy on the broader economy. Under the Trump 2.0 administration, it’s becoming increasingly clear that the U.S. dollar may weaken as a deliberate policy tool.
A weaker dollar would reverse the current headwind that has weighed on markets since the Federal Reserve’s December meeting. At that time, the Fed signaled fewer-than-expected rate cuts in 2025, which strengthened the dollar.
Since the announcement, the U.S. Dollar Index (DXY) has climbed 3%, adding pressure to U.S. multinationals that generate revenue overseas. Companies in the S&P 500, which derive 40% of their revenue from international markets, typically see their earnings shrink when the dollar is strong.
If Trump and Bessent pursue a weak dollar strategy, the effects could be transformative. A weaker dollar boosts the competitiveness of U.S. exports, benefiting manufacturing and agriculture sectors. Historically, a 10% drop in the dollar has been associated with an 8% increase in S&P 500 earnings, as noted by Goldman Sachs. Since we all know earnings are the main driver of stock price movements, this would be a huge win for investors.
A weaker dollar is also bullish for commodities like gold and oil, which are priced in dollars. During Trump's first term, gold surged over 40% in two years following his dovish trade policies and fiscal stimulus.
We made a lot of money holding gold in 2024. If this dynamic plays out again, it could be another great year for our commodity positions (along with export-heavy stocks).
The Deregulation Boom is Here
We've talked a lot about how a de-regulation wave is likely to provide a tailwind for markets over the next few years. We saw a similar trend in the 1980s after Ronald Reagan was elected, ushering in a new era of economic growth, fueled in part by widespread deregulation.
Reagan aimed to reduce government intervention across industries, including transportation, energy, and finance. These policies sparked innovation, competition, and economic expansion, which directly benefited the stock market.
From 1980 to 1989, the S&P 500 delivered an average annual return of 17.3%, compared to just 7.8% in the 1970s, a decade marked by stagflation and heavy regulation. Reagan’s economic agenda, which included tax cuts, deregulation, and a focus on free-market principles, laid the foundation for one of the most robust bull markets in history.
The Dow Jones Transportation Average more than tripled in value during Reagan's two terms, as airlines and logistics companies capitalized on newfound flexibility to expand and innovate. Similarly, financial stocks benefited from loosened banking regulations, with the KBW Bank Index soaring by over 200% during the 1980s.
Small-cap stocks also outperformed significantly during this period, reflecting the entrepreneurial spirit Reagan’s policies encouraged. The Russell 2000 Index, which tracks small-cap stocks, delivered a staggering annualized return of 20.6% from 1982 to 1989, as reduced regulations made it easier for smaller companies to compete and grow.
I expect a similar trend to unfold during Trump 2.0. But as Stanley Druckenmiller discussed yesterday on CNBC, it will be a stock picker's market.
This will be very similar to the environment in 2023, which we nailed by beating the market and generating a +36% return.
And I know one stock that will almost certainly outperform in 2025.
Buying a New "Trump 2.0" Stock Today
I have been patiently waiting to buy this stock.
It is the one company that benefits from the Trump Administration 2.0 more than any other.
And of course, I'm talking about