The stock market is hovering near record highs, and investors are once again debating whether to ride the rally or take cover. One argument is cutting through the noise: Trust Trump.
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Relying on President Donald Trump as a market signal might divide opinion politically, but the track record is undeniable. He has become one of the most powerful bullish forces in modern investing, often moving markets with a single post.
Trump Challenges the Fed and Wins
For decades, investors lived by the mantra “Don’t fight the Fed.” But Trump did just that. He openly pressured the Federal Reserve to lower interest rates, bucking Wall Street orthodoxy that warned against challenging the central bank. Eventually, he got his way. The Fed eased policy, and the market kept rising.
Trump has since sought to reshape the central bank into a more market-friendly institution. For investors, the episode was a reminder that his influence goes beyond politics and can reset even the strongest assumptions on Wall Street.
“Don’t Be a Panican”
On April 7, when the market sold off over early tariff diplomacy, Trump coined a new word. He warned investors not to be “panicans,” which he defined as “weak, stupid” people. The S&P 500 is now up about 31 percent since that warning.
More recently, on Sept. 18, just after the Fed’s quarter-point rate cut, the White House blasted out another message. “DON’T BE A PANICAN,” the post read, alongside a photo of Trump with his fist raised and a caption that declared “S&P 500 rallies to high.”
Investors who took the advice have outperformed. Since April, Trump’s own market calls have delivered a 27 percent return, outpacing the S&P’s 14 percent gain this year.
Why Small Caps Benefit Most
Investors betting on the “Trust Trump” thesis may want to look at small caps. The iShares Russell 2000 ETF (IWM) has surged 34 percent since Trump’s April message, outperforming the S&P 500 (SPX). Unlike the S&P, which is dominated by multinationals, the Russell 2000 is packed with U.S.-focused businesses that stand to gain most from lower rates and favorable domestic policy.
Traders can use call spreads to position for more upside. With IWM near $241.60, a January $245–$255 bull call spread costs about $4.35. If the ETF finishes above $255 at expiration, the spread pays out $5.65. The timing captures the Fed’s October and December meetings, both of which could be influenced by Trump’s ongoing pressure for easier policy.
Trump Treats the Stock Market as a Report Card for His Presidency
Love him or hate him, Trump treats the stock market as a report card for his presidency. That creates a unique alignment of incentives for investors. His policies, rhetoric, and pressure on institutions like the Fed all push in the same direction: higher stock prices.
Whether it is tariff talks with China or another unexpected policy twist, Trump continues to wield enormous market power. The message he wants investors to hear is to trust Trump and not be a panican as the S&P 500 rallies to highs.
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