Don't trumpet Trump - trumpet the bull market

What a difference a month makes! Before 8 November, everyone feared a Trump win would put stocks in the dump. Didn't happen. Now they're wondering when the "Trump rally" will slump.

My advice: Don't sweat it. Consider the common wisdom's recent history: Everyone feared the Italian vote would derail markets, but stocks barely blinked. Folks just knew Brexit would be awful, but stocks got over it in two days.

Pundits were sure Trump's win was a calamity. Stocks moved on after two hours. Experts were consistently pessimistic, never in doubt, consistently wrong. Stumped! Maybe they're wrong now, and the Trump rally is just a rally! A normal one, with no expiration date!

Whether Trump or Clinton won, stocks probably would have ralliedLast month, I wrote markets would probably receive Trump the same way they usually greet a new Democratic president: mild returns in the election year as campaign pledges scare investors, then above-average gains in the inaugural year as he moderates or Congress thwarts him.

Whether Trump or Clinton won, stocks probably would have rallied, enjoying the falling uncertainty; just normal when the president people feared before the vote wins. Clarity trumps prior fears, and investors get on with it.

I just returned from Forbes' investor cruise, where everyone was atwitter about all things Trumpish. Non-Americans are even more befuddled than yanks, a sign uncertainty is falling here. This aids the rally, but it's far from the only driver.

Trump is one step in the staircase. Not even the first step. Just one of many, along with a growing world, improving corporate earnings and political gridlock, which prevents radical legislation across Europe and North America.

Another happy step

Higher long-term interest rates are another happy step. Despite the handwringing, banks are doing well. Why? Higher long rates steepened the yield curve. Few fathom this - most think like consumers, not bankers. If you're a consumer, higher long rates are bad. Pricey loans! Ugh!

But if you're a banker, they're good. They make lending more profitable (banks borrow at short rates, lend at long rates and pocket the spread). Hence, banks can increase the quantity of money by lending more.

Throughout quantitative easing (QE), as central banks wrongheadedly reduced long-term rates and flattened the yield curve, you could only get a loan if you didn't need one. Higher rates enable banks to take more risk and lubricate the economy. Instead of trumpeting Trump, trumpet the yield curve.

Fear persists about Trump's protectionist policies and cabinet appointmentsYou might argue "Trump rally" chatter means investors are too Trump-happy, setting up disappointment. I don't think so. Fear persists. Angst abounds over his protectionist rumblings, threatened private-sector interventions, and cabinet appointments. Americans tend to think they can delve into the nuances of Trumpery and every appointment.

Future Commerce Secretary Wilbur Ross thinks policy should try to erase the trade deficit, so Trump will try to erase the trade deficit!

Trump made a big show of convincing one company to keep jobs here, so he'll jawbone all companies into submission!

Sorry, not that easy. Politicians and appointees frequently say one thing and do another. You've seen this already with Theresa May in your country.

No big deal

In and out of America, people make too big a deal about Trump.

To those outside America, it looks bizarre: He won the election but lost the popular vote by over two and a half million votes? Crazy!

Meanwhile, Americans tend to be overconfident about their Trump-pinions. I think it's because they don't understand what happened, so he seems extraordinary.

For all the tweets, Trump's ascendance isn't nearly as unusual or weird as depictedAfter all, experts said he wouldn't, couldn't win! Now they struggle to make sense of what they didn't foresee, interpreting every Tweet, appointment and statement. They react by digging in their heels on pre-existing opinions.

But these are the same people who couldn't predict how he'd do in the first place! As I wrote in the Financial Times in July, if Trump won every state where Republicans control the legislature, he'd take 309 electoral votes while losing the popular vote. In the end, he won 306. Yet no one saw it coming.

Trumpmania is fathomable when you understand America's electoral system and history. For all the Tweets and rants, Trump's ascendance isn't nearly as unusual or weird as depicted.

Stocks will be just fine

Whether you love or loathe him, it doesn't matter, because presidents can do very little without Congress. Stocks will be just fine with this, as the nearly eight-year bull market marches on. Here are two for you:

Diapers? A growth business? Soon enough! Millennials' birthing era is phasing in while Boomers are starting to embarrass themselves - a coming bulk-of-the-population barbell shift.

Kimberly-Clark, number two for babies and tied for tops for adults, is the logical beneficiary. Its prospects exceed its price/earnings (PE) multiple of 18 times my 2017 earnings goal or its 3.2% dividend yield. (It also owns Kleenex brand tissue and Scott napkins, towels and wipes.)

Banking has been tough. Pacific Rim, mining and commodities, too! That's hurt Westpac Banking, Australia's number two bank by assets and number one by branches. But the pain will pass.

It's well managed, as shown by slightly rising earnings throughout this pall. It's great for cash flow, inclined with a 4.3% dividend yield while at 13 times my September 2017 earnings guesstimate.

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.