Published By: Tarrence Sun | 11/24/2024

The 2024 election ended with a bang that reverberated across the financial markets. Wall Street didn’t just take notice—it reacted like a kid in a candy store. Donald Trump’s return to the White House ignited fiery debates and sparked a massive rally on Wall Street, creating what we now call the “Trump Stock Euphoria.” 

But here’s the thing: The market’s rush to embrace this era of high-risk, high-reward optimism was far more of an emotional reaction than it was a rational one. The surge in stocks during Trump’s time in office wasn’t purely about fundamentals. While many investors including me have profited from the highs, something is lurking beneath the surface that shouldn’t be ignored. But like any sugar rush, the question isn’t just how high you go, but how long you can stay there. The big question now is—can this euphoric ride continue, or are we just staring at an inevitable crash?

Post-Election: Euphoria, One Trade At A Time

The morning after Trump’s victory, the markets didn’t just open—they erupted. The Dow Jones soared past its previous all-time high with a nearly 5% increase, driven by sectors like defense, technology, energy, and infrastructure. Investors are betting on Trump’s bold policies, including the resurrection of his signature “America First” agenda. But what’s most intriguing is the story behind some individual stocks.

Palantir: AI at the Border

Palantir ($PLTR), the data analytics giant, is up 55% since Election Day as of this publication. Why? Trump’s promise to deploy cutting-edge technology to “secure the border like never before” has investors salivating over lucrative government contracts. Palantir’s AI-driven surveillance tools are being touted as the centerpiece of this vision. It’s not just about border walls anymore—it’s about sensors, drones, and real-time predictive analytics.

Sure, ethical debates are swirling around the use of AI in such a context, but for investors, it’s simple: border security means business. My take? Palantir’s gains look sustainable in the short term, as government spending on security tech is unlikely to slow. However, the stock could face headwinds if public backlash intensifies or if Democrats regain control of Congress in 2026.

Tesla: The Elon-Trump Alliance

In a plot twist few saw coming, Elon Musk endorsed Trump during the campaign. Musk’s high-profile endorsement and substantial donations weren’t just about politics—they were about positioning Tesla ($TSLA) for the future. Trump’s announcement of a new Department of Government Efficiency—in which Musk is rumored to play a consulting role along with Biotech Billionaire Vivek Ramaswamy—has created a fresh buzz around Tesla’s involvement in streamlining government operations through automation and AI.

Tesla stock has jumped 45% since the election, fueled not only by Musk’s proximity to power but also by the promise of federal contracts to develop energy-efficient fleets for government use. Call it opportunistic, call it genius—either way, it’s a windfall for shareholders. My gut says Tesla will ride this wave for a while, especially with Trump’s pro-business policies paving the way for innovation.

Energy Stocks: Back in the Spotlight

Energy giants like ExxonMobil ($XOM) and Chevron ($CVX) are also basking in Trump’s victory glow. His pledge to unleash American energy dominance—reviving pipelines, cutting green energy subsidies, and expanding drilling rights—has reignited investor enthusiasm for fossil fuels. As oil prices tick upward, these stocks are surging.

But here’s my contrarian take: don’t overstay your welcome in energy. Sure, the sector is enjoying a honeymoon period, but long-term trends toward renewables and ESG investing aren’t going away. This is a short-term play, not a forever one.

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What’s Next: The Road Ahead for Trump’s Market

While the initial market rally is thrilling, the question on everyone’s mind is, “What happens next?” Here’s where I think we’re headed—and it’s not all sunshine and rainbows.

1. The Deregulation Boom

Trump’s promise to slash regulations across industries will undoubtedly create winners. Banks are likely to benefit big-time, with stocks like JPMorgan Chase ($JPM) and Bank of America ($BAC) already inching higher on expectations of relaxed lending rules. Industrial companies, particularly those tied to construction and infrastructure, are also primed to gain.

However, deregulation is a double-edged sword. What looks great for businesses in the short term can lead to long-term risks, such as financial instability or environmental degradation. Investors would do well to ride the wave but keep an eye on potential blowback.

2. The Fed Pivot and Inflation Watch

With Trump re-entering office, the Federal Reserve may face political pressure to maintain a dovish stance, even as inflationary pressures mount. This could create a favorable environment for equities in the near term, but there’s a catch: inflation could creep back into the picture. If that happens, it might force the Fed into an awkward position, tightening monetary policy at the worst possible time.

What does this mean for stocks? Growth stocks, especially in tech, could thrive if rates stay low, but the party ends if inflation forces the Fed’s hand. My advice? Diversify. Hedge your bets with inflation-protected assets like commodities or REITs.

3. AI and Tech: The Crown Jewels

The AI sector is positioned to be the darling of the Trump era. Companies like Nvidia ($NVDA) and Microsoft ($MSFT), which power much of the AI revolution, are already surging. Trump’s focus on bolstering national security through AI and cybersecurity means these stocks are likely to see continued demand.

But the real wildcard here is regulatory scrutiny. While Trump’s administration may go easy on tech compared to the Biden years, bipartisan concerns about monopolistic practices and data privacy could still lead to headwinds. My take? The AI boom isn’t over, but it’s no longer a blank check either.

4. Infrastructure Revival: A Reality Check

Trump’s renewed push for infrastructure development has sparked a rally in construction-related stocks like Caterpillar ($CAT) and Vulcan Materials ($VMC). Investors are banking on massive spending to rebuild America’s roads, bridges, and airports.

However, let’s temper expectations. Passing an infrastructure bill isn’t a slam dunk, especially with a divided Congress. The enthusiasm is justified, but don’t overestimate the pace at which these projects will materialize. Infrastructure stocks could be a great medium-term play, but patience will be key.

My Take on the “Trump Market”

The 2024 Trump Stock Euphoria is thrilling, but it’s not without risks. It’s easy to get caught up in the excitement, especially when every headline seems to promise another market rally. But here’s my advice: stay level-headed. This market is driven by optimism, and while some of it is warranted, not every stock will be a winner.

Look for companies with tangible catalysts, like Palantir’s government contracts or Tesla’s role in energy efficiency. Avoid speculative plays that rely too heavily on Trump’s promises coming to fruition—politics is an unpredictable game, and legislative bottlenecks are a real risk.

Finally, remember that every euphoria has an expiration date. The challenge for investors is knowing when to take profits and when to stay the course. If you play it right, the Trump Stock Euphoria could be a goldmine. If you don’t, you might be stuck when the music stops. Happy investing!