We're in a new age for investing. The internet has democratized access to market data. ETFs continue to open up new frontiers for low-cost portfolio strategies. Complex algorithmic trading programs dominate public exchanges. And now, for the first time, there's an app that makes your phone ding every time the leader of the free world tweets about a stock you own. Business Insider explains:
The free iPhone app works by letting you set up financial "triggers," which you can then use to guide your investment decisions. For example, you can set a reminder to sell a stock when its price reaches a certain level, moves a specific percentage, hits a one-year low or high, and so on. When the condition occurs, Trigger sends you a notification, and you can decide whether to act on it.
Now the company has rolled out a special "Trump trigger." The trigger "gives you the ability to trade stocks based off of Trump’s tweets about public companies," the startup wrote. Basically, the trigger works by notifying you if Trump tweets about a publicly traded stock that you own, in real time.
If you had downloaded the app Thursday, you would have known already that Trump sent Toyota's stock tumbling midday with a tweet accusing the company of building cars in Mexico. Investing will never be the same.
Never mind the fact that there are probably dozens of hedge funds out there running high-speed, quantitative models designed to cash in on retail investors blindly trading the brief swings in stock prices that follow Trump tweets.
And never mind the fact that since Trump was elected president, his tweets attacking or praising various companies have virtually zero predictive power on longer-term price moves. For example, in the week following celebratory tweets about Ford and Carrier, the former's stock outperformed the S&P 500 by nearly 2 percent while latter's parent company United Technologies underperformed by 1.6 percent.
Alternatively, when Trump logged into Twitter dot com to scold companies like Lockheed Martin and Boeing for contract costs, the resulting price pattern was equally murky. Boeing's stock swooned in pre-market trading after Trump blasted Air Force One costs, but by the end of the day the price had edged past the S&P. Lockheed's stock acted similarly after the president-elect pilloried the F-35 program. A week after their respective tweets, Boeing lagged the S&P by 8 basis points, while Lockheed was up 11 bps.
But who cares! When you feel that sweet buzz of insight vibrate your pocket, and you read that President Trump has just, say, excoriated Raytheon over its missile prices or lauded Corrections Corporation of America for creating thousands of new jobs, it's your duty as an investor to contact the broker of your choice and buy or sell accordingly.
What does it matter if someone quicker, savvier and more connected will make a buck off your trade? What counts is that you're doing your part in Trump's economy. The hedge funds will thank you.