Investors adapt: Too risky to buy when Trump is awake

The unpredictable nature of Donald Trump's pronouncements on his social media platform, Truth Social, is forcing global investors to significantly alter their trading strategies. With Trump back in the U.S. presidency, his declarations on everything from peace deals to trade agreements and even investment tips can trigger immediate and drastic market reactions.

Veteran trader Lars Hansson described his new approach: "I buy almost nothing after 1 p.m. Then Trump wakes up – after that, anything can happen." This sentiment reflects a broader trend where market participants are increasingly wary of engaging in trades during periods of heightened Trump activity.

“

I buy almost nothing after 1 p.m. Then Trump wakes up – after that, anything can happen.

Elin Benjaminsson, a market strategist at the online bank Avanza, noted that the immediate reaction to market shifts is now to check Trump's latest Truth Social posts. "When something suddenly happens on the stock market, the reflex is now to directly check what Trump has written," she said. This reliance on Trump's social media has become a primary indicator for many.

“

When something suddenly happens on the stock market, the reflex is now to directly check what Trump has written.

Investors worldwide are adjusting their methods, as the timing and content of Trump's announcements are impossible to anticipate. Hansson has reduced his market exposure from an hour to just 5-10 minutes, taking fewer risks when Trump is active to mitigate the impact of a "Trump news" event. However, he acknowledges that not all eventualities can be prepared for, leading some to abstain from trading altogether when Trump is online.

Previously, major news often broke at predictable times, allowing investors to prepare for new trade agreements or significant corporate announcements. Benjaminsson explained that this is no longer the case, as "quarterly report results and other corporate news ultimately matter less. Everything is overshadowed by what Trump communicates." The resulting market swings can be extreme, as exemplified by a 500-point gap up after Trump announced a ceasefire following earlier threats against Iran, a situation Hansson called "crazy" due to its potential for catastrophic losses for unprepared traders.

“

I have 30 years of experience in this and have never seen anything like it. Suddenly we had a gap up of 500 points. If you are on the right side, it's a party, but if you are on the wrong side, it's a catastrophe – you can have blown your whole account. It's crazy.