Trump Trades – Short S&P500, Long Gold / Silver, Currency trade TBD

This is a simple bet.

If Trump gets in, at least for the first week S&P down 10-15%, gold up 10%, USD down 5-10%, I also think bonds could surprise on the downside.  Then the markets realise he actually has very little power and everything goes back up again – if the president had power Obama would have achieved more.

If Hillary gets in very little happens, up 5% maybe, tops… Trump supporters could start civil disobedience if they think the election was stolen – in which case we go down a touch and I win anyway.

The elite are broadly those with money, most active on the markets, pricing this risk.  They don’t believe Trump can win so wont bet on it.  I think they are wrong, the disconnect between them and the regular people has widened substantially.  They live on different planets.  They also control the media and the polls.  With no employment protection in much of the US I suspect Trump supporters may be under-reporting.  Even in the UK I am nervous of saying I support him (and I only very mildly support him as a way of kicking the elite).

I think people are waking up to the existence/ influence of the elite.  Trump is almost certainly a charlatan but Hillary is a crook and the only way to get any sort of progress is to attack the elite.  Their share of the cake has grown, particularly in the US and it needs redistributing…  Trump is the best way of doing this available so I think he may well win, the odds of this are not being correctly priced.

I shorted the S&P500 at 2106 – -13.5% portfolio weight, I also bought 3.7% portfolio weight in Silver and 10% Gold. I will also look to do some FX trade, possibly USD/JPY or USD/CHF or a combination of those…  Hopefully I can manage my risk via some form of guaranteed stop so if Hillary wins I dont get hit by gaps up.

The portfolio is a natural hedge and will likely go up slightly if Hillary wins, I recon it is relatively low beta so will go down less than the market if Trump wins. Still expecting a small loss if Hillary wins and a big payoff if Trump wins.

This is a speculative one and many value investors would say you shouldnt do trades like this.  They have worked for me in the past so I am going to keep doing them regardless…


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s