Today, the markets showed exceptional strength, with a broad-based rally across multiple sectors and robust trading volumes. It’s encouraging to see such widespread participation, indicating strong investor confidence. While a pullback wouldn’t be unexpected, I anticipate that this rally could continue until Inauguration Day. Barring any unforeseen events, this upward momentum looks set to persist.
This optimism largely stems from the market’s favorable outlook on the pro-growth policies advocated by the current administration. Investors are bullish on initiatives that prioritize tax cuts, deregulation, and stimulus measures aimed at economic expansion. Such policies tend to benefit industries like finance, energy, and manufacturing, which can thrive under reduced regulatory burdens and incentives for capital investment. Regional banks, in particular, stand to gain as they benefit from rising interest rates and increased lending activity in a thriving economy.
However, the transition of power brings potential risks. As Inauguration Day approaches, institutional investors will begin positioning themselves based on the anticipated policies of the incoming administration. Changes in fiscal strategy, regulatory shifts, or other policy adjustments could create volatility. If new policies diverge sharply from current expectations, markets could react swiftly, especially in sectors heavily reliant on existing growth-oriented strategies.
I’ve prepared a new post with a deeper look at why financials, especially regional banks, are poised for strong performance in this environment. Stay tuned for more insights on how the evolving political landscape may impact these markets.
Upstart
Upstart was down today, which is to be expected after the massive run it has had. Yesterday, I mentioned taking some profits and today I took a little more than $85.00, but I still hold a solid position. My reasoning is straightforward: for taking some profits, after a 35-point increase in just a few days and a 59-point rise since July, no one can accurately predict the stock’s next move. While everything I anticipated so far has come to pass, the sequential earnings and revenue growth story is only just beginning, that is why I haven’t sold my entire position. But nobody knows where the market will be in 6-12 months and it is never good to say I should have sold.
I live by the saying, “Pigs get fat, hogs get slaughtered.” No matter what happens now, I’ve locked in a substantial gain. My goal is to be the fattest pig in the pen—not the slaughtered hog. Following this mindset will lead to success in the market because there’s always a winning stock out there. You just have to be patient and identify it.