Making sense of market moves
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After enduring nonstop ads, aggressive texts begging for “just another $5,” and a news cycle involving a bear carcass, American voters are nearing the finish line.
But what does a new presidential administration mean for your portfolio?
Broadly speaking, analysts believe that a Kamala Harris presidency would boost sectors like clean energy, homebuilders, and healthcare. Meanwhile, a second Donald Trump administration would lead to gains in industries like cryptocurrency, financials, small caps, and energy.
The “Trump trade” may sound like a game involving Trump’s digital playing card collection, but it’s actually a strategy that involves investing based on what sectors are set to gain in his administration.
Here are the specific stocks that could enjoy gains under a Trump administration.
- A more relaxed regulatory environment could boost financials like Goldman Sachs and Citigroup, according to UBS analyst Andrew Garthwaite.
- US autos such as Ford Motors and General Motors should benefit from the harsher tariffs that Trump has proposed, according to UBS.
- Trump is pro fossil fuels, which could lead to gains for US oil companies like Exxon and BP.
- Private prison stocks like Geo Group and CoreCivic could get a boost.
- Trump has cozied up to bitcoin bros, and promised to make the US the “crypto capital of the planet,” which would translate to good news for bitcoin and crypto exchanges like Coinbase.
Meanwhile, the “Harris trade” would mean investing in a completely different set of stocks.
- A Democratic administration promises more investment in renewable energy, according to UBS, boosting stocks like First Solar and Enphase Energy.
- Companies that have exposure to China, such as Apple and Starbucks, would fare better under Harris, according to UBS.
- Healthcare picks such as Centene Corp and Molina Healthcare could see gains from Harris bolstering Obamacare and Medicaid enrollment.
- Home renovation stocks like Home Depot and Lowe’s should do well, given Harris’s policies to assist homebuyers.
Of course, trading based on the election is not an exact science. Politics is just one minor factor among many, such as macroeconomic data, corporate earnings, and a slew of other unpredictable factors that influence markets.
Another thing to keep in mind: With the election coming down to razor-thin margins, the results could take days to finalize—likely leading to even more market volatility in the short term this week.
But analysts are quick to point out that the stock market has consistently gone up through different political administrations—meaning that, in the long run, staying diversified and invested through political turmoil is a winning strategy.—LB