The New Investing Strategy Of BlackRock

Bloomberg just published a new report where they said BlackRock moved billions of dollars in the market right after Trump won the election. And so, what I want to do today is go over this Bloomberg report that way you understand how BlackRock is looking to profit off of this Trump presidency.

Now, the reason why you might want to pay attention to this newsletter particularly is because BlackRock is the world’s largest asset manager. That means they own and control a big chunk of the stock market. So if money moves in and out of BlackRock, well, that can affect your stock market portfolio. So that’s why you might want to understand what BlackRock is looking to do, and with that, let’s dive right in.

And if you want to read the full Bloomberg article for yourself, here’s the link: Bloomberg Article

Starting with Point number one, what BlackRock had to say is that the markets are booming—not necessarily because Trump won the election, but because the election is finally over. Here’s what one of the lead portfolio managers at BlackRock had to say:

That means that businesses in the United States, according to BlackRock, were frozen. They were not investing; they were not growing. They didn’t want to go out and make big business decisions until they knew who won the White House. And now that there’s less uncertainty because there is a new president now elected for 2025, businesses will feel more comfortable going out and investing in their businesses and growing their businesses. And that’s what’s leading to a big chunk of the market boom that we’re seeing happen right now.

And of course, we just saw the S&P 500, Dow Jones, and Bitcoin just break a new record high. That being said, we also know that certain sectors and certain industries are going to benefit more from a Trump presidency than a Harris presidency because Trump has a very different economic plan than Harris. For example, Trump has talked about deregulating oil and gas, deregulating financial services, investing in the military, and imposing tariffs. This is a different plan than what Harris had proposed, so those plans will impact the economy differently than what Harris was proposing to do.

Before I go into what BlackRock had to say about this, I want to give you one disclaimer:

Number one: I’m just a random guy. You are never guaranteed to make money when you invest. In fact, you will lose money at some point, so make sure you always do your own due diligence and never blindly trust a random guy. If you are a long-term investor and you’re investing in something like the S&P 500 because you just want exposure to the economy and you’re investing in these long-term ETFs, index funds, and mutual funds, what’s happening in the White House does not and should not change your investment strategy because you are a long-term investor and not investing for election cycles.

The things that I’m going to be talking about BlackRock are talking about government shifts.

What do I mean by that?

Well, our largest spender in our economy is none other than the government. Government spending makes up somewhere between 20 to 30% of our GDP, our entire economic spending. So depending on who’s in the White House, the spending that happens in our economy will be impacted to some extent because the person who’s leading the White House will have different proposals and different plans on how to spend this money.

So if you are more of a fundamental investor, we’ll call it more of a sophisticated investor, and you’re looking for individual investments that are impacted by government shifts, this is where that more research can help you.

Now, going back to what BlackRock said, BlackRock said after Trump was elected, two things:

1. They saw the fastest inflow of cash into the Momentum Factor ETF ever.

2. They saw a huge outflow of cash out of their bond market ETFs.

The reason why BlackRock said that they saw this huge outflow and inflow—we’re talking about billions of dollars in a matter of a day—is because of two reasons.

Number one: Now with the election over, businesses can focus on growth instead of holding their breath.

Number two: Interest rates will continue to go down, which will continue to stimulate these momentum stocks.

Let me read you exactly what BlackRock had to say about number one—businesses continuing to grow now that the election is over:

What does that mean?

BlackRock is now putting more money into the stock market, capital markets, because now they believe businesses are going to be more focused on growth.

And the reason why businesses will be more focused on growth and more comfortable spending money on growth is because they believe that many businesses have held off on important business and strategic decisions because businesses did not know what was going to come in the White House in 2025. And now that that uncertainty is resolved, businesses are going to spend more money on growth. That is where BlackRock says that it’s going to help stimulate the economy and stimulate the stock market, which is why BlackRock is putting more money into the markets because of that.

Along with that, BlackRock has also seen more money go into their momentum stock ETFs and move out of their bond ETFs. A big reason for that has to do, according to BlackRock, with interest rates and where interest rates are going. This is what BlackRock had to say:

So, BlackRock believes that the market is going to continue going up—that’s what bullish means—because we’re starting to see that the job market is cooling, the labor market is cooling, while economic growth is still strong. That should support the Federal Reserve Bank to continue cutting interest rates.

Now, if you’ve been keeping up with the financial news at all, whether it’s Market Briefs or just any sort of financial news, you might have heard about some drama between the Federal Reserve Bank and Donald Trump. Where the Federal Reserve Bank chairperson, Jerome Powell, says that even if Trump asks him to leave, he will not leave. And the Federal Reserve Bank says that they’re not going to change their policy decisions based on what Donald Trump wants. But despite that, BlackRock is saying that the data is going to support more interest rate cuts, and these interest rate cuts, despite the fact that we’re seeing a slower job market, should continue to stimulate the economy. And that’s why BlackRock is saying that money is leaving the bond market because, as interest rates go down, your returns by investing in bonds go down, and more money is going into stocks because that can potentially yield you higher returns.

And along with that, BlackRock has also seen a lot of money flow into the momentum ETFs—momentum stock ETFs. Now, when we talk about momentum, that’s generally smaller companies, and the reason why that matters is because smaller companies, especially companies that are not profitable, need outside capital—money from outside venture capital, debt, or other sorts of investment dollars to keep running their businesses.

So if you’re a startup and you’re not making a profit and you need to raise debt or you need to raise investment capital, interest rates play a big impact because when interest rates are high, you’re going to have to pay higher interest rates on your debt—that’s more expensive. And when you go out and try to raise money from a venture capital firm or any sort of bank or institution, they may give you either a lower valuation or less likelihood to give you funding because these institutions then need a higher rate of return to justify their investment.

But when interest rates fall, you as a startup can pay less money to borrow that money and you could potentially qualify for a higher valuation, meaning getting more dollars. And this is where BlackRock has seen a big influx of cash into the momentum stock ETFs because they believe and investors believe that as interest rates go down, that can help the startups grow even faster.

What’s going to happen, of course, we don’t know.

I do want to leave you with a couple of pieces of information:

Number one: If you are a long-term investor and you’re investing into general funds giving exposure to the economy, none of this matters. Just ignore the noise.

Number two: “Is the market too hot? Are we going to see a recession? Are we going to see a market crash?” So I do want to address that very briefly, and I want to say this:

Recessions happen, but most people don’t expect them to happen. Recessions don’t happen when people expect them to happen. So I want you to keep that piece of education in mind, and if you are a long-term investor, just remember, markets go up and markets go down. Don’t chase investments. Look for unique investment opportunities. But it doesn’t just have to be government shifts. You want to be investing where you see a unique investment opportunity and invest for the long term.

I’m not a trader; I don’t advocate for trading because I don’t understand how that works. But if you are a long-term investor and you’re investing for the long-term, generally we know that markets go up under Democratic presidents and Republican presidents, and sometimes they go down under Republican presidents and Democratic presidents.

And with that…

Cheers,

Jonas