The real Trump surprise

Donald Trump will be America's next president - shocking all the pollsters, media and wise-guys who said he'd never win. Now they're all panicking, but you shouldn't. Like I wrote last month, Trump should do much less than feared - be less bad - a positive 2017 surprise for stocks. Buy it.

This is Brexit all over again. The big losers are all the wise-guys and anyone who based bets on polls and pundits. After Brexit, they panicked - eek! The polls were wrong! Retreat! - but then they got over it.

World stocks fell 7.1% (in USD) the two trading days after the vote, but then recovered. UK stocks fell 5.6% on 24 and 27 June, then bounced fast. Now they're 9.2% above pre-vote levels.

Those who tried to trade on that swing got whipsawed - likely what happens now with Trump terror. Wait it out.

Get over it

Markets' immediate reaction to Brexit didn't tell you how things would ultimately be. Nor does the immediate reaction to Trump. US futures markets tanked as election results rolled in and Trump's chances increased.

But the next morning, the S&P 500 rose. The FTSE 100 opened down, but swung higher as the day went on. People are already getting over it, just like they got over Brexit. Once you can see the real losers were the pollsters, media and wise-guys, it's easy to see why those who based bets on these sources panicked - they can't think independently.

Markets receive a Trump win the same way they usually view a DemocratBut the more they see Trump can't do as much as he says, the happier they'll be.

I still think markets receive a Trump win the same way they usually view a Democrat - below-average returns in the election year, stronger in the inaugural year.

Historically, US stocks averaged just 7.4% in election years when Democrats won - talked down by anti-business campaign pledges.

The next year they surged, averaging 16.2%, when campaign talk proved cheap. Either the president moderated, already eyeing re-election, or Congress blocked him. Surprise!

Do-little Trump

Republican lawmakers, Wall Street, Corporate America and investors fear Trump. But that's all priced in now. What isn't priced is the 2017 reality of a do-little Trump.

Republicans kept a slim Congressional majority, but not enough to override Democrats' opposition to major changes.

Then, too, many Republican lawmakers declared war on Trump when campaigning. They'll stay at war - in politics, almost no one learns. Intraparty gridlock will block Trump. Having lost the popular vote, he simply lacks a broad mandate. Congress will fight at every turn.

America's government was designed to limit presidents' authority. It will be no different now. Trump can't do much without Congress.

When politics stymy Trump promises, markets will price that calming in 2017 - they'll love itHe can annoy! The media can spend four years battling him! The circus will continue! But that's sociology. Stocks don't do sociology.

They care about what presidents actually do - how much legislation they get, and whether it's better or worse than most expect. When everyone fears disaster, and reality is only sort of bad or even ok, that's a happy, bullish surprise.

When politics stymy Trump promises, markets will price that calming in 2017. They'll love it. Just as they normally do following a Democrat's win. Stocks did great in John Kennedy's, Barack Obama's and Bill Clinton's first years. All had bigger Congressional majorities than Trump will.

Obama had a Democratic supermajority in Congress and a sweeping popular vote mandate, and he got just two major initiatives passed - health care and financial reform. Trump likely accomplishes even less, bringing stocks plenty of relief.

Bull market should grind on

So own stocks. They may be volatile in the days ahead, but this joyless bull market should grind on and up. Here are two picks to add to your collection.

How to react to the Wells Fargo phony-account scandal? First: buy Wells Fargo. This will all blow over after more hyper-hoopla, handwringing, likely fines, lawsuits and relatively immaterial settlements.

In no time it will be seen, like most stock scandals, as an unmemorable molehill. Wells Fargo is a great franchise. Its stock will soon enough show that.

Because Regions is seen as hated, it's ultra-cheap, with better than T-Bond dividend yieldsSecond: buy any of the other most-hated banks. Number one in the hate hierarchy, using Consumer Financial Protection Bureau data on complaints per billion bucks of deposits: Regions Financial.

Complaint volume, like scandals, has nothing to do with the basics of a bank's franchise. Overall, Regions and its fellow scapegoats are just fine.

Because it is seen as hated, it's ultra-cheap, with better than T-Bond dividend yields. Surely management will be working overtime moving forward to improve their image. The time for blowhard senators will soon be over for this cycle. Buying time!

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.