Shortly after President Trump won the election in November of 2016, big money raced into the US dollar. The idea was that a new President with an America first agenda in which China would be labeled a currency manipulator had to be good for the US dollar. Lots of money raced into the US dollar and in funds like the PowerShares DB US Dollar Index Bullish Fund (UUP).

US Dollar Chart

US dollar chart is in a strong downtrend as Trump rally fizzles.

Within two months of Trump winning the White House, UUP was up by more than 5.5% but shortly after January when Trump took office, UUP has been in a strong downtrend since. In fact, UUP is -3% lower than when Trump won the White House in November. Investors have now pulled more than $265 million from the fund this year.

Trump didn’t label China a currency manipulator on day one of his presidency and so the US dollar fell. It fell again in March when we all learned of the stupid idea that tax cuts and an infrastructure spending program were not going to take place until the Affordable Care Act was repealed.

In each of Trump’s legislative defeats on repealing the Affordable Care Act, it has pushed out tax cuts and an infrastructure jobs program further and we are seeing that reality reflected in the US dollar.

Presidential Theme Investing Does Not Work

The massive losses piled up by traders who went long the US dollar serves as a reminder that presidential theme investing doesn’t work.

I learned this lesson the hard way with Obama back in 2009. I went long solar power stocks when Obama won thinking that with his liberal anti-oil, anti-coal agenda, solar power companies would surely benefit.

I suffered massive losses and it took me years to get my trading account balance back up to where it was before the disastrous “go long solar on Obama” trade.

I don’t do presidential theme investing anymore.

I did jump into cement stocks back in February as a play on Trump’s border wall. I didn’t do it because of Trump. I did it because cement charts started ripping higher as other traders were betting on cement and I figured I could take a little bit of money from those presidential theme traders. I rode up cement and then sold it quickly when it started to look topy.

I recommend against doing presidential theme investing unless you are going for a quick swing trade on a technical setup.