Should You Buy Stocks When Trump Tells You To?

If your co-worker at the water cooler gives you a “hot” stock tip, you can just politely ignore him. What if the Commander in Chief gives you a stock tip, though?

Investors can’t afford to ignore what the most powerful person on the planet is saying about asset prices. After all, President Donald Trump has the authority to sign executive orders that will impact stocks, bonds, gold, cryptocurrency and more.

Here’s a roundup of what happened recently. A month ago, President Trump announced on his Truth Social platform that it was a “great time to buy.” Several hours later, Trump paused some of his tariffs and stocks rallied.

Now, I know what you might be thinking. You can just follow Trump’s Truth Social account 24 hours a day, seven days a week and you’ll be ready for the President’s next market-moving announcement – right?

Not necessarily. Speaking to reporters in the Oval Office on Thursday, the President said, “You better go out and buy stocks now.” Trump added that the economy “will be like a rocket ship that goes straight up.”

Courtesy: Yahoo Finance

Again, the stock market rallied upon Trump’s bullish recommendation. However, in this instance, monitoring Truth Social 24 hours a day wasn’t the way to get first access to the President’s market calls.

At this point, some folks might raise questions about ethical considerations about the President of the United States issuing predictions about the financial markets. Yet, here’s something to consider.

On March 3, 2009, right at the bottom of the stock market crash of the Great Recession, Barack Obama told reporters that “buying stocks is a potentially good deal.” Since then, the stock market rose more than 300%.

Was Obama just “lucky” with that perfectly timed market call? That’s debatable, but suffice it to say that Trump isn’t the first President to recommend buying stocks.

Also, note that this isn’t insider trading. By taking to reporters or posting on Truth Social, Trump is sharing his stock market recommendation to everyone.

The point here is that it’s worthwhile to pay attention to what powerful people have to say about the financial markets. You can’t easily disregard individuals who have the power to move markets rather than just observe them.

Courtesy: Yahoo Finance

Bear in mind, though, what’s going on when a President talks up the stock market. It’s not only an expression of what he thinks will happen; it’s also a projection of what he wants to happen.

Just as importantly, retail investors should think about whether they can realistically act on presidential announcements and social media postings. Were you quick enough to profit on Thursday’s stock market rally after President Trump told people to “go out and buy stocks now”?

Not likely. You can try to monitor the President’s verbal statements and social media postings all day long, but there are computer algorithms and trading robots that can act faster than any human can nowadays.

Instead of trying to beat the machines, I just buy great assets at low prices and hold them for the long term. This approach worked well for Warren Buffett and Berkshire Hathaway for 55 years, and it’s a superior strategy that doesn’t require you to monitor social media postings or beat algorithms to the punch.