Investing in a world where Donald Trump is running the largest economy is likely to be a considerably different experience than it was in the eight years before he came to power.
Pre-Trump, the major themes were low interest rates, falling yields and low inflation levels. Now, investing ideas already have shifted even before Trump assumes the presidency in January.
The market is focusing on higher levels of inflation and rising yields, and it's tiptoeing into an unsure era where the Federal Reserve unwinds the extraordinary amount of accommodation it's provided over the past eight years.
"The next few quarters are setting up as a cyclical investor's dream, but like all dreams, they require some interpretation," Nick Colas, chief market strategist at Convergex, said in his daily note to clients Tuesday. "The funny thing about cyclical stocks" — shares, such as those in consumer discretionary companies, whose price is affected by the overall economy — "is that investors give them far more leeway than other sectors during an expected upswing."
Indeed, it pays to take a closer look at what is happening in the market when trying to divine what has generated the Trump rally. In this case, it's better to turn the old adage on its head and look at the trees rather than the forest.
The three weeks since the election have featured a fairly uneven rally, with financials dominating and more than half the sectors lagging the S&P 500's 3.2 percent gain.