The fear of a Trump presidency took hold on the night of the 2016 election, evidenced by the dramatic drop in U.S. equity futures. That night, we also saw Dow futures slide roughly 800 points, but then in the morning, general expectations were thwarted.

In fact, an upward movement in the stock market actually occurred. And from that point forward, we have seen stocks move up dramatically.

So, what moved us from complete negativity to euphoria?

That question came up a few weeks ago when I had dinner with a long-time friend. He is very successful in the investment industry. And it was during our conversation that I realized what the renewed economic confidence is all about, and how it is powering the market.


My friend told me that the morning after the election, he woke up feeling free for the first time in a very long time. I asked him what he meant by that, and he said: “For the past eight years, I have been told almost every day that I am a bad guy. That being successful was somehow wrong and not okay and that it was my fault that every segment of our population was suffering.”

He had also been told, he added, “ . . . that I needed to do more, give more, work harder, give away my money to someone else, because I was a fat cat, a member of the class of the ‘1 percent,’ and the root of everyone’s problems.”

At that point I realized what these men were saying: that businesses and individuals are free to go for it.

I understood what he meant, and I could empathize, as I manage my own successful investment business.

I remembered watching a segment of Bloomberg TV featuring an interview with JPMorgan Chase CEO, Jamie Dimon, and although the language Dimon used was much less emotional than my friend’s, the sentiment was the same.

Dimon said: “I think it’s a reset moment for how businesses are going to be treated: 145 million people work in America; 125 million of them work for private enterprise; 20 million work for government—firemen, sanitation, police, teachers. We hold them in very high regard. But, you know, if you didn’t have the 125, you couldn’t pay for the other 20.


“Business is a huge positive element in society. But for years, it’s been beaten down as if we’re terrible people. So, I think it’s a good reset.”

At that point I realized what these men were saying: that businesses and individuals are free to go for it. The shackles have been removed, and businesses know that hard work and success are back in vogue. You can do what all Americans want to do: live the American dream.

At first glance, we could point to a couple of items driving the market forward: the proposed changes to tax law, less regulation, infrastructure spending and other proposals. It would be easy to make some off-the-cuff calculations based upon these proposals, and extrapolate out that with reduced taxes and cost savings on regulation, we might eventually be trading at a much lower P/E than the current 18X earnings.

Markets have been, and always will be, the best predictors of future economic activity. Currently, the S&P 500 is up 10.5 percent and the Dow is up 13.5 percent since the election. This movement has more to do with confidence in the future than fundamentals, as top-line earnings have not risen in a meaningful way. However, as of this writing, all of the new administration’s proposals remain conjecture.

Still, a new business confidence has been released. And the markets have predicted positive outcomes as a result. But if the proposals do not go through, will this confidence stay in place? That’s the biggest question of all.

This article was originally published in the May–July 2017 issue of Worth.