- President Donald Trump loves to take credit for stock records, but his influence on the market has been questioned in recent months. His impact remains undeniable in one area, however: companies that have the highest exposure to small and midsize customers.
“The reason our stock market is so successful is because of me,” Trump told reporters on Air Force One. “I’ve always been great with money, I’ve always been great with jobs, that’s what I do.”
Whether he’s correct is a complicated question. We here at Business Insider have not been shy about throwing water on Trump’s claims that he’s catalyzed record stock gains, at least in recent months. We’ve also conducted an in-depth investigation into alternative explanations for a surging market.
But despite our skepticism, new analysis from Goldman Sachs suggests that one area of the market is definitely still thriving as a so-called Trump trade: companies with high exposure to small and midsize businesses.
A Goldman-maintained index tracking the group has skyrocketed 38% since the election, almost double the return for the benchmark S&P 500. And it has done so largely on the prospect of less regulation for smaller companies, an outlook that pushed the NFIB Small Business Optimism Index to a 12-year high in the months after Trumps victory.
- Goldman Sachs
“Small business owners have been thrilled at the prospect of deregulation under the Trump administration,” said David Kostin, the chief US equity strategist at Goldman.
Also notable in the chart above is the lighter blue line, showing the postelection performance of the more small-cap-focused Russell 2000 index and the S&P 500. After spiking versus the benchmark in the months immediately after the election, the Russell has simply matched the performance of its large-cap peers ever since.
Overall, it’s clear that investors are still looking for Trump trades to ride higher as the president continues to make boisterous claims. And while the pickings may be slimmer than in the past, there are still opportunities out there, if you know where to look.