I am indebted to my friends at 7IM for the following:
By this time next week, the power centre of the United States will have moved back to Mar-a-Lago, Trump’s “Winter White House”.
To be honest, with temperatures in Washington DC hitting -10°C next week vs. +26°C in Palm Beach, Florida, it does genuinely seem like a pretty sensible thing to do…
On the less sensible side of the President-to-be ledger are things like this:
Source: x.com/kalshi
So, are we ready for another four years of policy via Twitter X?
A couple of examples from his first year in charge – antagonising North Korea…
Source: x.com/realDonaldTrump
… and asking some poor White House intern to mock up this video and then posting it …
Source: x.com/realDonaldTrump
It’s easy to get concerned. And difficult not to be distracted.
But just for a little bit of calm, and a little bit of context, it’s worth revisiting one of our favourite charts; Big Market Days (BMDs).
It’s how we explain the idea of volatility in a more … approachable … way. Rather than worry about standard deviations (😖) or options premia (🤢), we just look at how many times the market moved up or down by more than 1%, which is usually the threshold for people outside of finance to notice.
We update it every year to see how unusual stock markets were. For what it’s worth, 2024 was almost exactly average; 50 BMDs.
The really interesting point though is that if you look at 2017, Trump’s first year in office, the fire and fury on Twitter absolutely did NOT translate to markets.
2017 saw the least BMDs since 1965!
Source: FactSet/7IM. Past performance is not an indicator of future returns.
Now look, that doesn’t mean 2017 will happen again.
But it’s worth remembering that no matter how loud the President talks, the finance world doesn’t necessarily have to listen.
As always, if you have any questions about this piece or any other finance-related matter, please do not hesitate to contact me.
Yours sincerely,
Graham Ponting CFP Chartered MCSI
Managing Partner
