Trump Won: What It Means For Investors
The new administration will take office on January 20th.
Donald Trump won the U.S. presidential election with a big lead over Kamala Harris. He is now set to return to the White House. In this publication, I would like to try to explain what his win might mean for investors and different parts of the economy. But still, the key is to maintain a long-term mindset and emotional stability. Below are some compilations and personal thoughts, not a call to action.
Previous publication:
Content:
💵 Taxes
🌏 Trade Policies
📉 Economic Growth
📈 Stock Market
📊 Bonds
💲 U.S. Dollar
🪙 Gold
₿ Cryptocurrency
💵 Taxes
In his first term, Trump lowered the corporate tax rate from 35% to 21%. Now, he plans to cut it even further to 15%. This could help companies make more profit, which might be good for their stock prices. But lowering taxes could also increase the U.S. budget deficit, meaning the government might need to borrow more money.
Takeaway: Bigger companies may benefit most from these tax cuts, while smaller businesses may still face high tax rates. Investors in large companies could see gains, but the debt could create problems later.
Stocks & ETFs to Watch:
Large Companies: Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOGL) could benefit from lower taxes.ETFs: VOO offers broad exposure to large U.S. companies.
🌏 Trade Policies
Trump wants to put a 60% tariff on all goods from China and a 10-20% tariff on products from other countries. These tariffs will make imported goods more expensive in the U.S. Other analysts expect that these tariffs will reduce profits for companies that depend on imports, affecting many in the S&P 500 index.
Takeaway: Sectors like technology and retail that rely on global supply chains might see lower earnings. Tariffs could make U.S. products more costly overseas, potentially lowering sales for U.S. companies abroad.
Stocks & ETFs to Watch:
Import-Dependent Companies: Apple (AAPL), Tesla (TSLA), and Walmart (WMT) could face challenges.ETFs: iShares MSCI Emerging Markets ETF (EEM), for exposure to international markets affected by U.S. trade policies.
📉 Economic Growth
Trump’s trade tariffs and stricter immigration policies could reduce the workforce and increase inflation. This may slow down U.S. economic growth by about 0.5% by 2025, according to some experts.
Takeaway: Some companies may benefit from lower taxes, but tariffs and labor shortages could create challenges, especially for sectors like manufacturing, retail, and construction.
Stocks & ETFs to Watch:
Domestic-Focused Companies: Home Depot (HD) and Procter & Gamble (PG) could do better as they rely less on global trade.ETFs: Vanguard Total Stock Market ETF (VTI), for a broad range of U.S. companies.
📈 Stock Market
Several industries could see gains from Trump’s policies:
Banks: Lower regulation may boost profits for major banks.
Private Prisons: Stricter immigration rules may increase demand for private prisons.
Defense: Defense companies may benefit from higher defense spending.
Oil and Gas: Trump supports more oil production in the U.S., which may help companies like ExxonMobil. However, too much oil production could lower oil prices, hurting profits in the long run.
Takeaway: Banks, defense, and energy stocks may benefit from Trump’s policies. However, companies linked to green energy, like electric car makers, could face challenges if Trump removes tax incentives for clean technology.
Stocks & ETFs to Watch:
Banking Stocks: JPMorgan Chase (JPM), Bank of America (BAC).Defense Stocks: Lockheed Martin (LMT), Raytheon Technologies (RTX).Oil Stocks: ExxonMobil (XOM), Chevron (CVX).ETFs: Financial Select Sector SPDR Fund (XLF), Energy Select Sector SPDR Fund (XLE).
📊 Bonds
Trump’s policies are likely to increase inflation and the national debt, which may lead the Federal Reserve to raise interest rates. Higher rates make bonds pay more in interest, but their prices can fall.
Takeaway: Investors holding short-term bonds may benefit from higher interest rates. Long-term bondholders, however, could see bond prices fall, making these bonds less attractive.
Stocks & ETFs to Watch:
Short-Term Bonds: iShares Short Treasury Bond ETF (SHV), for those wanting to benefit from short-term bonds.Long-Term Bonds: Vanguard Long-Term Bond ETF (BLV), but be cautious as prices may fall with rate hikes.
💲 U.S. Dollar
Trump’s tax and trade policies could strengthen the dollar. However, Trump himself has said he wants a weaker dollar to help American exports. A strong dollar makes U.S. goods more expensive abroad, which could reduce demand.
Takeaway: A stronger dollar could benefit those holding dollar-based assets. For companies that sell a lot overseas, however, a strong dollar could hurt profits.
Stocks & ETFs to Watch:
U.S. Dollar ETFs: Invesco DB U.S. Dollar Index Bullish Fund (UUP), for investors wanting to benefit from a strong dollar.
🪙 Gold
Gold may become a safe-haven asset as investors seek protection against inflation and economic risks. Other analysts expect higher gold prices if investors worry about inflation and rising debt.
Takeaway: Gold could be a smart investment during Trump’s term if inflation increases. Gold ETFs or mining stocks may be good options for investors looking to hedge against market risks.
Stocks & ETFs to Watch:
Gold Stocks: Barrick Gold Corporation (GOLD), Newmont Corporation (NEM).ETFs: SPDR Gold Shares (GLD), iShares Gold Trust (IAU).
₿ Cryptocurrency
Trump has become more open to Bitcoin and other cryptocurrencies. Trump’s win might lead to higher crypto prices, with Bitcoin possibly reaching $90,000 by year’s end.
Takeaway: Trump’s policies may create a positive environment for cryptocurrencies, which could lead to price increases. Investors interested in crypto may find this time favorable, but it remains a high-risk sector.
Stocks & ETFs to Watch:
Crypto Stocks: Coinbase Global (COIN), Marathon Digital (MARA).ETFs: Grayscale Bitcoin Trust (GBTC), for exposure to Bitcoin.
This is not a financial or investing recommendation. It is solely for educational purposes.
Good call on Bitcoin. I think silver could outperform Bitcoin in 2025, risk adjusted. There is too much to explain in one comment, though. I did write an article about it.
thank you!