The pollsters, media and other ‘experts’ got it wrong, again, and now the investing world has to get used to the idea of a completely different backdrop. 

I want to make sure everyone understands that ‘Wall Street’ isn’t the same as investing, and you owning a portfolio of great American (and somethings non-American) stocks that help you generate wealth (best case) keeps your hard-fought earnings ahead of inflation (good case).  It’s a huge mistake to conflate the fat cats that helicopter to the canyons of lower Manhattan with owning shares in a 100-year-old food company.

On that note, markets sensed a possible Trump win via:

• Biotech (IBB)  up 6% in three days
• Cooper has been soaring
• US Steel (X) missed a week ago and the stock got slammed and then reversed big time

Today’s Session

I’m kind of bummed the Dow isn’t going to open down 1,000 points, and I’m not being facetious.   People are smart, and they all remember the British Exit selloff and swift rebound, and that’s putting a bottom in the market right now.  Beware of knee-jerk buying as much as the knee-jerk selling and know big European institutions and other elites are committed sellers over the next few days.

I wouldn’t chase drug names, which have been the target of mean tweets and threats from Hillary Clinton and Bernie Sanders.  Most of the large pharmaceutical names have thin product pipelines and aging blockbusters (some buy old names and make them blockbusters through unconscionable price hikes that Trump wouldn’t allow), but I do like the biotechnology sector.

Gold is still a hedge and not the investment vehicle you pour all your investing dollar.  Bitcoin is higher, but I’m not ready to play that game.

The losers include so-called ‘green energy’ (solar was already a broken space but gets even worse), health insurers and Kansas City Southern (KSU) has been singled out because its Mexican unit – at some point it will be oversold, but no need to look at this dip today.

New Investment Model

Your investment thesis must shift to Washington, D.C. and draining the swamp of handcuffs and anchors.

• Obamacare
• Regulations
• Taxes
• Dodd Frank
• Climate Deals

Note: On the issue of trade, I continue to say this is an area I hope can be addressed without a trade war.  Depending on the degree of concessions trading partners would accept, this could be a plus.  It simply remains to be seen.

Winners

In general, corporate America will benefit greatly from lower taxes, but there are certain winners in a Trump presidency.

The big infrastructure promise will boost a variety of industries that I call ‘dirty fingernails’ industries.  This morning, Caterpillar (CAT),  Vulcan (VMC) and US Steel (X) are all up.  Obvious investments also include defense companies and energy-related names, although crude is driven by macro factors which makes me think natural gas and even coal might outperform.

Federal Reserve

Donald Trump campaigned against the Federal Reserve and Janet Yellen, so we must wonder what the next move will be from the central banker.  I thought it would be difficult for the Fed to hike rates in December even before the election outcome as this simply is not a roaring economy.  Now it’s even more doubtful the Fed while hike, and I don’t think the president-elect wants them to make any moves right now. 

Conclusion

I read how Huma Abedin called Kellyanne Conway so her boss could concede defeat.  Apparently, Donald Trump was very complimentary and sincere.  Then the president elect gave a magnanimous and uplifting acceptance speech that is as critical to reviving American as his policies.  I’ve always said policy is the mechanics, but to make it work, people must be moved because they feel morning in America (Reagan's famous saying that I think was the underpinning of his success… it takes more than the right policies to spark people and a nation). The acceptance speech went a long ways toward that end.