What President Trump’s Twitter Habit Means For Your Portfolio

What President Trump’s Twitter Habit Means For Your Portfolio

Trump attacked Rexnord for Moving to Mexico Trump started criticizing companies on Twitter before he even took office. RXN moved down slightly after Trump's tweet, but then rebounded and continued to move sideways. LMT gapped down by about 2.5% after Trump's first tweet. Then it dropped about 1.3% after Trump's second tweet. But then he took on the media companies over the summer. Trump's Twitter outbursts against the Times don't seem to have affected its stock though. MRK barely moved on the day of Trump's tweet. Amazon's stock had already been in a downtrend, and Trump's tweet didn't help it to recover. But the day after Trump's comments the markets dropped slightly and started moving sideways. There were a few instances where stocks dropped slightly after he criticized companies.

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Summary

Trump’s unprecedented comments on individual companies can temporarily alter a stock’s trendline.

The affected stocks almost always return to their original trends a within a few days, however.

Investors should hold through Trump’s tweets and speeches, and avoid using tight stop losses.

President Trump’s Twitter influence is undeniable. But his comments about individual public companies are also unprecedented. He can cause the stock market to react with just 140 characters. But can that influence alter a stock’s trend? What’s Trump true impact on the stock market? More importantly, what should investors do to protect themselves? Let’s determine that for ourselves by examining some of Trump’s most famous tweets about companies and the corresponding stock charts.

Trump attacked Rexnord for Moving to Mexico

Trump started criticizing companies on Twitter before he even took office. One of his first targets after winning the presidential election was Rexnord (RXN). He first attacked the company back on 12/2/16 for moving jobs to Mexico.

RXN moved down slightly after Trump’s tweet, but then rebounded and continued to move sideways.

RXN daily
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Figure 1: Daily chart of RNX. Chart provided by FreeStockCharts.com. The date of the tweet is shown by the red arrow.

Trump attacked RXN again on 5/7/17 for moving jobs to Mexico. The stock slipped down the next few days, but then resumed its sideways action. RXN’s investors didn’t seem to share the same concerns about the company moving jobs out of the U.S.

RXN daily 2
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Figure 2: Daily chart of RNX. Chart provided by FreeStockCharts.com.

Trump Criticized Aerospace Contractors

Next up, Trump criticized two well-known aerospace contractors over the costs of their government contracts. For instance, on 12/6/16 Trump tweeted that the new Air Force One that Boeing (BA) was constructing cost too much. He even threatened to cancel the order.

His remark coincided with a small drop in BA that day that quickly reversed. And the stock has climbed strongly since then.

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Figure 3: Daily chart of BA. Chart provided by FreeStockCharts.com

BA weekly
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Figure 4: Weekly chart of BA. Chart provided by FreeStockCharts.com

Trump made a similar threat with Lockheed Martin (LMT). He complained about the cost of the new Lockheed F-35 fighter jet twice, once on 12/12/16 and again on 12/22/16. In fact, he even suggested that he would consider accepting bids from Boeing to replace the F-35 the F-18.

LMT gapped down by about 2.5% after Trump’s first tweet. Then it dropped about 1.3% after Trump’s second tweet. But Trump never followed through on his threats and LMT recovered to climb about 17% since then.

LMT Daily
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Figure 5: Daily chart of LMT. Chart provided by FreeStockCharts.com.

LMT weekly
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Figure 6: Weekly chart of LMT. Chart provided by FreeStockCharts.com.

Despite Trump’s initial rhetoric, both stocks have benefited from the Trump presidency. Trump’s increased focus on military spending has helped their bottom lines.

Trump Takes on the Auto Industry

Trump’s next target was the auto industry. Trump blasted General Motors (GM) on 1/3/17 for moving Chevy Cruze production to Mexico. He threatened to issue a border tax on GM unless the company kept production in the U.S.

Investors seemed to yawn at this exchange though as the stock barely moved that day.

GM Daily
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Figure 7: Daily chart of GM. Chart provided by FreeStockCharts.com.

Trump similarly took on Toyota (TM) for building plants in Mexico on 1/5/17.

Toyota’s stock dropped slightly that day, but it also coincided with a longer-term downtrend. It’s difficult to determine how much of that drop was due to Trump’s comments, but they…

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