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Trumponomics: DOW 20K

Now that I have started writing blog again, I have decided to get into habit of writing blogs every couple of weeks. Somehow I let complete election season go without writing much and expressing my views. Anyway, based on various bets I lost (4 to be exact), my friends (and family know) whom I was supporting in elections. I really wanted to see first Madam President. But alas, that did not happen due to some campaigning mistakes (and little bit of arrogance to ignore Michigan and Wisconsin).  Now that Trump is going to be our President, I am fully on board in supporting Donald Trump as President of USA starting in Jan.
What surprised me was the margin of his election victory and how markets took U-turn (for better) after hearing his acceptance speech. No-one would have thought that DOW would cross 19K if Trump wins. But here we are - all three indexes at all time high. Oil is back in action heading towards $60.

What is Trumponomics:
  • Big tax cuts - hoping that trickle down effect would help everyone
  • Big infrastructure spending
  • Big defense spending
  • Big noise on trade protections (this would be mostly noise to scare of many policy-makers in other countries to behave)
  • Bring money parked outside US into US by paying small tax
  • Low interest rates (FED would adopt go-slow as they have been doing over last 8 years)
  • Symbolic job returns to US (similar to Carrier deal)
  • General sentiment about "Make America Great Again"
With these basic principles of Turmponomics, I won't be surprised if DOW crosses 20K and all other indexes keep on reaching all time highs over next 3 months. The question is till when this merry-go-round will keep playing?
Given this, my current recommendation is to go long on energy stocks. Even if they have rallied recently due to OPEC announcement, there is still room to run. Normally I prefer small-caps because they outperform significantly if times are improving (but also have risk of going bankrupt). Few stocks I have been monitoring are: Sanchez Energy (SN: around $8.40), AMD (around $8), Sunpower (SPWR: around $6.50), CVRR (around $8), SWN (around $10-11) and ERX (at around $35)
That's all for now. I promise to write my blog more often. 
/Shyam

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