What Investors Are Getting Wrong About Trump
You are remembering the last bull market wrong...
Before we get started, I wanted to let you know the new episode of my podcast Room to Run is live on Spotify and Apple Podcasts.
In this week’s episode we discussed:
Why Wall Street may be misremembering how stocks really performed in Trump’s first term
Why 2025 isn’t playing out like the last two years—and probably won’t
Responding to the podcast’s first piece of hate mail
Preview of this week's market moving events
Each 10-minute episode can be listened to for FREE on Spotify and Apple Podcasts. If you enjoy the podcast, please leave a review.
Do you remember that iconic moment in Silence of the Lambs when Jodie Foster’s character sees Hannibal Lecter for the first time and he stares at her and says, “Hello, Clarice”? You can probably hear it in your head right now—delivered in Anthony Hopkins’ chilling voice.
Well, the weird part? That scene never actually happened.
It’s an example of what’s called the Mandela Effect—when a large group of people collectively misremember an event. In this case, Hannibal Lecter never says “Hello, Clarice” in the film. It’s a collective false memory.
And I think there’s something similar happening in the market right now.
The Trump 1.0 Mandela Effect
A lot of investors—and analysts like me—are suffering from a sort of Trump Mandela Effect. We remember the stock market performing incredibly well under his first administration. The S&P 500 was up 63% during his four years in office. In fact, 2019 was one of the best years for the index since the early 2000s.
But what we often forget is just how chaotic things were during that time.
I was working as the senior equity analyst at Mauldin Economics during those years, and I’ll be the first to tell you—it wasn’t smooth sailing. In 2018 alone, we had three significant corrections: a -12% drop after the initial tariff announcement, a -9% slide in March, and a brutal -20% selloff at the end of the year following a sharp escalation in the trade war with China.
Even after the market recovered in early 2019, we saw another -8% pullback… all before the COVID crash wiped 35% off the S&P 500 in just a month.
Trump brings volatility. That’s just the reality. And it’s why my number one prediction for 2025 was that the low-volatility bull run of 2023–2024 was over.
So what’s happening now?
A Controlled Demolition is Underway
Let’s go back to Silence of the Lambs for a second.
While “Hello, Clarice” may be the most quoted line that never happened, there’s another, far more powerful moment in the film. Lecter asks Clarice if she still hears the screaming of the lambs—lambs she once tried to save from slaughter.
That metaphor? It hits home right now.
Because in my view, the Trump administration is intentionally leading the market—specifically stock investors—to slaughter. Not in a malicious way. But in a strategic one.
It reminds me of what Paul Volcker and Ronald Reagan did in the early 1980s. They induced a recession by hiking interest rates to nearly 20% to finally break the back of inflation. It was painful in the short term, but it worked.
Trump and Treasury Secretary Bessent seem to be attempting a similar economic reset—but with a modern twist.
Instead of using the Fed to tighten monetary policy, they appear to be relying on a negative wealth effect—letting the stock market fall to slow spending, reduce inflation, and drive down U.S. Treasury yields so the government can refinance the $9 trillion in debt coming due in 2025.
Here’s how that works: 94% of U.S. stocks are owned by just 8% of Americans. And the top 10% of earners drive 50% of consumer spending. If stocks fall, these folks feel poorer. They spend less. And that slowdown ripples through the economy.
It’s a brutal strategy—but not a dumb one.
Still, just because there’s a plan doesn’t mean it’ll work. It could easily backfire. But I’d feel like I was leading you to slaughter if I didn’t lay this all out plainly.
And I know that’s been a surprise to some of you since I’ve been a relentless bull on US stocks and crypto since early 2023.
The Situation Has Changed
During that time, the playbook was simple: buy the dip. But that only worked because the trend was up, the fundamentals were strong, and the administration was stock-market friendly.
That’s no longer the case.
Now, I’m not calling for a crash. But I wouldn’t be surprised to see the S&P 500 fall as much as -20% from its highs before this is over. Considering we’ve already fallen -10%, that means we’re likely halfway there.
That’s why I’ve been actively reshuffling the portfolio—taking profits in tech and crypto and reallocating into more defensive names.
Like Clarice, we can’t ignore the screaming. We can’t pretend we’re still in the same market as a year ago. The administration is signaling it’s willing to let the market fall to achieve its broader goals. As investors, it’s not our job to panic—but it is our job to adapt.
Respect the technical damage. Reassess your risk. And be selective. There will be new leaders and another leg up in this bull market. And who knows, we could have already bottomed after a run-of-the-mill correction. But that’s not how I see it, which is why I’m in defensive mode.
Because if I am correct, the goal is to limit your drawdown as much as possible so you can buy high-quality stocks and crypto on the lows.
And if that comes to pass, I’ll help you capitalize when the time is right.
Stay safe out there,
Robert