November 9, 2016 – A Surprise Market Bounce

Few people would have predicted that stock markets would rise on a trump victory. The S&P 500 was up 1.1% on Wednesday and Toronto was up 0.7%. And that was on top of strong gains in the U.S. on Monday and Tuesday which were thought to be attributed to a pending Clinton win.

Futures markets were down close to 5% last night. This is market where the vast majority of retail investors do not participate. This mostly larger and supposedly smarter players. As of now, it appears that they were massively wrong.

Trying to guess major market moves in advance is probably just not a reasonable strategy. Better to have an equity exposure you are comfortable with and then lean somewhat against the market AFTER it moves. Buying low and selling high REQUIRES going against the market to some degree.

Today’s rally may or may not last. It is always possible that the market will turn if it concludes that Trump was serious about all his plans. Not just the ones the market likes. I am not going to try to predict any such moves. Rather I will continue to buy or hold what appear to be good companies available at good or reasonable prices. I avoid stocks that appear to be unreasonably high in price.

Individual winning stocks today included Stantec up 12.1% and Wells Fargo up 5.4%, and Bank of America up 5.7%.

Melcor Developments reported results after the close. Earnings are lower than in Q3 2015. But the company is still profitable even during the Alberta recession conditions. I will update the report after a full reading of its results and after I see how the market reacts.