There’s no doubt about it. Twitter Inc (NYSE:TWTR) has had an hour, a day, a week, a month and a year to forget. No matter what seems to be happening, TWTR stock keeps finding new ways to gut punch unreasonably faithful investors. Even traders speculating on buyout rumors were tossed to the curb and given a New Jersey-style beat down.
About the only thing that Twitter can find solace in is President Donald Trump — and I mean of the United States.
Yes, that United States. There is simply no higher form of affirmation than to receive it from the most powerful man in the world. Should Twitter ever fail, and its social media platform completely disintegrate, there would be no more sorrowful person than Donald Trump.
But joining the list of people who are, and will continue to be, beneficiaries of the POTUS are brokerage stocks. While the financial sector overall has cooled due to a slowdown among major banks, brokerage stocks should find that their prospects are much brighter.
Primarily, this is due to the fact that brokerage stocks are equal opportunity servicers. That is, they cater to both bullish and bearish traders. That’s a distinct advantage over big banks, where their core business is lending. If the economy tanks under Donald Trump, money velocity would grind to a halt. That’s bad for everyone involved, but the financial sector would likely take the brunt of the damage.
That wouldn’t necessarily be the case for brokerage stocks, where profits can be made on any side of the table. Although it’s an extreme example, the movie “The Big Short” highlighted the very real possibility of making a ton of money from American misery. Since the people who are lured into the stock market aren’t necessarily tethered to any which direction, brokerage stocks do well so long as people are interested.
And boy are they interested! Donald Trump is a gift to all speculators. Every word, every tweet is a trading opportunity just waiting to be discovered. That’s the bigly reason why brokerage stocks will have a breakout year. And in case you’re wondering, bigly is indeed a legitimate word.
Brokerage Stocks to Buy: TD Ameritrade Holding Corp. (AMTD)
TD Ameritrade Holding Corp. (NASDAQ:AMTD) CEO Tim Hockey is a man that knows exactly what’s up. Sure, AMTD is one of the hot-flyers among brokerage stocks, which would make any executive happy.
Quarterly profit over the last three months of 2016 increased by 2% “when trading spiked after the election and the Federal Reserve raised interest rates,” according to the AP.
AMTD is also bolstered by its acquisition of rival brokerage firm Scottrade, which involves a $4 billion cash and stock deal. That takes a major competitor off the table, and helps bring in more clients under the Ameritrade umbrella. Thanks to its proprietary investing platform, they’re doing just that. Additionally, AMTD is attracting financial advisors to service the bump up in demand.
That’s all fine and dandy. However, the enthusiasm towards brokerage stocks wouldn’t be so pronounced were it not for Donald Trump. Indeed, Mr. Hockey articulated this very point when he was interviewed recently on CNBC. How else to explain his comment that “everyday we wake up and say hopefully [Trump] will say something“?
So let’s just be real. AMTD is a great investment because Donald Trump can’t control himself. Next!
Brokerage Stocks to Buy: E*TRADE Financial Corp (ETFC)
Because of the Donald Trump tweeting machine, E*TRADE Financial Corp. (NASDAQ:ETFC) is definitely one of the brokerage stocks you need to consider.
Here’s why: A few years ago, ETFC began running advertisements featuring perennial Hollywood bad boy Kevin Spacey. The premise was simple — are you a “Type E” personality? In other words, are you savvy enough to spot trends and profit off of them?
It was a brilliant marketing strategy by E*Trade because it feeds into people’s ego. Of course I see things others can’t! I’m a cut above the rest! But if we’re being honest, most of us can’t see two feet away from us. A lucky break here or there doesn’t count. As the old saying goes, a broken clock is right twice a day.
But with Donald Trump, nobody has to be born with Nostradamus-like talent. Just open a Twitter account and follow @realDonaldTrump. The now President will provide all the trends you could ask for, and many that you didn’t. So go ahead and buy those put options on funds tracking China, Japan and the European Union — you know he’s going to say something crazy.
Best of all, when he does, he doubles down! That’s even more incentive to consider ETFC.
Brokerage Stocks to Buy: Charles Schwab Corp (SCHW)
Among brokerage stocks, few have the reputation and integrity of Charles Schwab Corp. (NYSE:SCHW). This isn’t just empty rhetoric. For 2016, Fortune named SCHW as one of the world’s most admired companies.
Specifically, Charles Schwab was ranked number one in the category of innovation and social responsibility, and number two in the securities and asset management industry.
But because they’re primarily a retirement and wealth management firm, would the Donald Trump effect have any benefit for SCHW? Heck yes, it would! First off, more than half of Americans are scared out of their minds over the fiction novel turned reality. A reality TV star now has the codes to our nuclear arsenal. “You’re Fired!” may no longer be a metaphorical phrase. If that hasn’t inspired people to reshuffle their portfolio, I don’t know what will.
Let’s also remember that Charles Schwab has a viable trading platform that rivals offerings from other brokerage firms. Because of the trust factor, it wouldn’t be that much of a stretch for sales reps to push this service. And with Donald Trump taking the White House, it’d be almost stupid for people not to consider trading services.
We really have no idea what’s going to happen over the next four years. SCHW at least gives people a sense of something they can control.
Josh Enomoto exclusively trades stocks and options on the E*TRADE platform.