The Great Unwind: How a 120-Stock Election Trade Lost Its Trump Alpha

MarketDash

Mar 27, 3:28 PM

Citrini Research's clever long/short bet on the 2024 election soared after Trump's win, then crashed in 2026. Here's what the convergence of its longs and shorts tells us about trading policy momentum.

Key Points

Citrini Research built a market-neutral basket of 120 stocks in March 2024 to trade the U.S. presidential election, going long on Republican beneficiaries and short on Democratic policy exposures.
The strategy surged over 220% after the election but then reversed hard in 2026, giving back more than two-thirds of its peak gains and wiping out the post-election "Trump alpha."
The convergence between the long and short legs was broad-based, mirroring Bitcoin's trajectory, suggesting a macro repricing rather than issues with specific stocks.
The trade is a textbook example of policy momentum investing, where profits come from shifting market expectations about government direction, not company fundamentals.
Key constituents included short positions in clean energy and EV stocks like Tesla and NextEra, and long positions in defense, law enforcement, and financial deregulation plays like Palantir and Blackstone.

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Back in March 2024, a relatively new player on the scene, Citrini Research, decided to make a big, thematic bet. The firm, founded by James van Geelen just the year before, constructed a long/short, market-neutral basket specifically designed to trade the outcome of the 2024 U.S. presidential election.

The logic was straightforward, if ambitious: go long on stocks expected to thrive under a Republican administration, and short those seen as vulnerable to Democratic policy priorities. This wasn't a bet on post-election fundamentals for individual companies, but a pure perception play on shifting political odds and the market's reaction to them.

The basket was massive, spanning roughly 120 names across themes like tariffs, energy, financial deregulation, healthcare, and immigration. It was a bet on policy momentum itself.

The Spectacular Rise and Hard Fall

For a while, it looked like a stroke of genius. According to a performance chart shared by Citrini, the basket ripped higher after the November 2024 election. The momentum carried into mid-to-late 2025, with the strategy peaking at a staggering return of over 220% since its inception in early 2024.

Then, in 2026, it all came undone. The trade reversed hard, giving back more than two-thirds of those peak gains. As of the recent update, the basket still shows a cumulative return of about 65.49% since early 2024. But the crucial part—the post-election "alpha," or the extra juice specifically attributed to the Trump trade—has been completely wiped out. The market giveth, and the market taketh away.

When Longs and Shorts Start Holding Hands

The most interesting part of this unwind is the convergence. In a basket of 120 names, you'd expect some divergence, some winners and losers based on their own stories. But the long and short legs moved toward each other in a strikingly synchronized fashion.

A user on X pointed out that Bitcoin (BTC) had followed a eerily similar path. Citrini Research replied with a note that underscores the macro nature of the move: "Crazy how close they've traded when you consider this is long/short on 120 names, maybe 5 of which have any exposure to crypto whatsoever."

That's the tell. This wasn't a basket being dragged down by a few bad crypto-adjacent picks. The repricing was broad-based, hitting policy-sensitive equities across the board. It suggests the market's collective mind changed about the future trajectory of regulation, spending, and priorities, not just about a few companies.

What's a Trader to Make of This?

This chart is a classic case study in policy momentum trading. You're not betting on earnings or management teams; you're betting on the market's ever-shifting expectations of what the government will do. The steep drawdown in 6 signals one thing clearly: those expectations shifted dramatically.

Citrini Research, which made waves earlier in 2024 for its sometimes-contrarian takes on AI's economic impact, didn't point to a single catalyst for the reversal. Sometimes the mood just changes. The narrative that powered the trade for over a year simply lost its steam, and the air came out of the balloon all at once.

Who Was in the Basket?

The original March 2024 framework gives us a clear picture of the thesis. The short side was heavily weighted toward clean energy and electric vehicle names seen as beneficiaries of Democratic policies like the Inflation Reduction Act (IRA). Think Tesla Inc. (TSLA), NextEra Energy Inc. (NEE), Plug Power Inc. (PLUG), Albemarle Corp. (ALB), and Enphase Energy Inc. (ENPH).

The long side bet on a different America: more defense, more law and order, more financial deregulation. Key longs included defense and immigration tech play Palantir Technologies Inc. (PLTR); law enforcement tech firms Axon Enterprise Inc. (AXON) and Motorola Solutions Inc. (MSI); private prison operators GEO Group Inc. (GEO) and CoreCivic Inc. (CXW); financial giant Blackstone Inc. (BX) (a play on M&A and deregulation); and Oracle Corp. (ORCL), noted for its alignment with GOP donors.

It was a precise, thematic bet on a specific political future. For a long time, it worked spectacularly well. Then the future arrived, and the market decided to reprice it. That's the tricky thing about trading narratives—eventually, you have to live in the world they create.