Trump Is Bullish. That Means You Should Be, Too.

Kratos Defense & Security Solutions is a top holding of the iShares Russell 2000 ETF. Above, the Kratos XQ-58A Valkyrie unmanned combat aerial vehicle. (Courtesy Kratos)

The stock market is orbiting around record highs, and many investors are wondering what’s their next best move. The answer is simple: Trust Trump.

Relying on President Donald Trump as the reason to remain invested might be controversial, but he is a powerfully bullish market force. Not enough investors understand this because the passions of his critics and fans obscure his clout.

One example of his incredible market power is how he took on one of the market’s oldest, most intractable principles: Don’t fight the Fed. The Federal Reserve is so powerful, no one should mess with it. But Trump fought the central bank by insisting on lower interest rates, and he won. Now he’s trying to remake it in his own bullish image.

It’s anyone’s guess what happens in the stock and options markets over the next few weeks. Some strategists and fund managers expect higher highs for stocks, while others advocate hedging should stocks decline from record levels.

Investors should look past Wall Street’s analytical efforts toward Washington, D.C. The president is the world’s most powerful investment strategist—and his bona fides prove it.

On April 7, when the stock market was declining because of his nascent tariff diplomacy, Trump warned on social media against being “panicans,” a word he coined to describe “weak, stupid” people.

Anyone who listened did well. The S&P 500 index is since up about 31%.

On Sept. 18, after the Fed cut rates by a quarter-point, the White House tweeted “DON’T BE A PANICAN.” The message was accompanied by a photo of the president, fist held high, with a note that the “S&P 500 rallies to high.”

To contextualize the president’s investment influence, his 27% return exceeds the S&P’s year-to-date gain of 14%, one-year return of 18%, and three-year return of 23%.

Let the returns be a reminder of the merit of keeping political views and investing separate. Whether you like or abhor the president is irrelevant. He views the stock market’s performance as a reflection of his presidency, and he has many market-moving tools that he can use to enhance this relationship.

If Trump secures a positive outcome to China tariff negotiations, for instance, stocks will probably rally. Who knows whatever else he’s planning?

To monetize the Trust Trump adage, investors can consider a bull spread on the small-cap iShares Russell 2000 exchange-traded fund (ticker: IWM) to pre-position for higher stock prices and lower interest rates.

With the ETF at $241.60, investors can buy the January $245 call option and sell the January $255 call for about $4.35. If IWM is at or above $255 at expiration, the spread is worth a maximum profit of $5.65.

The January expiration captures the Federal Open Market Committee’s October and December interest-rate meetings.

Why IWM? The ETF comprises companies that do most of their business in America, compared with the S&P 500, which is dominated by multinational companies. From Trump’s April post to now, the ETF is up about 34%. During the past 52 weeks, it has ranged from $171.73 to $247.18.

A medley of IWM’s simple five-, 20-, 50-, and 100-day moving averages indicates that support is converging around $240. The ETF’s 100-day simple moving average is $219, demonstrating traders’ conviction on its stability.

If the trade works, the profits can be used to offset holiday spending—and maybe some of January’s estimated tax payments. Should the Trust Trump thesis prove wrong, the loss is limited to the spread’s cost.

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