To paraphrase a smart quote about Trump the public takes him seriously but not literally whereas the media takes him literally but not seriously.  The former explains his election – the latter the existence of his antagonists.

Exceptions?  Sure.  There are people who hang on his every word and take to social media to voice their over the top indignancy just as there are media outlets that refuse to romanticize the noise.

But while opinions abound one thing that’s clear cut is the price of equities and how investors have fared in reacting (or not) to the Trumpian noise.  Let’s have a look…

Since Trump’s election in November 2016 retail investors have put money into the stock markets every month.  They’ve ignored the noise of trade tensions, the Mueller investigation, tariffs, tax reform, impeachment and other nonsense.

Data shows ETFs commonly used by retail investors that prefer low cost (e.g. “VOO” – Vanguard S&P 500) have had muted volatility.  Light trading with consistent positive fund flows.  Doesn’t make for sexy headlines so little attention has been paid by the media.

Conversely ETFs commonly used by the trading community that prefers liquidity to cost – “SPY” (SPDR S&P 500), “IWM” (iShares Russell 2000) and “QQQ” (PowerShares QQQ Trust) – have been frequently volatile and sometimes violently.  This is the headline-grabbing action.

Since Trump’s January 2017 inauguration the S&P 500 has returned 33%.  That’s 12% on an annualized basis and 33% higher than the historical norm of 9%/yr.  Want to look beyond the S&P?  No problem.  Both international developed and emerging markets are up 19%.  Even those unsexy bonds have returned 7%.  These figures include the May 2019 selloff and an iffy 2018 that ended on a down note thanks to perceptions of a Fed hellbent on raising rates.

The pattern since Trump’s election is that he says (or Tweets) something provocative and the media (over)reacts.  We’re told the sky is falling.  ETF data shows traders react whereas investors stay cool.  As a result traders have been out of the market on more days than investors.  Put another way traders missed out on a portion of the 12%/yr S&P 500 ROR while investors have harvested the gains.

The best way to have reacted to the noise was not to.  History provides a valuable lesson.