Chris Carosa, Senior Contributor
Oct. 27, 2020
You probably already know that, from a market standpoint, in the long-term it really doesn’t matter who wins the election . In the short-term, however, the stated policies and promises of each candidate offers a potential upside for stocks in certain industries.
Here are the industries financial professionals suggest you should focus on in Donald Trump’s second term.
The Oil/Gas Energy Sector
After the last debate, this is where all eyes are fixated, and yours should be, too.
“The energy sector will likely climb,” says Ryan D. Brown, a partner and attorney at CR Myers & Associates in Southfield, Michigan. “In the final Presidential debate, Biden indicated he would ‘transition from the oil industry’ and replace it ‘with renewable energy.’ If Trump wins, traditional American energy companies would breathe a sigh of relief.”
Oil and gas stocks and pipeline companies fall into this category. They may benefit most given the President’s policies. “Trump is supportive of cheap energy prices and fossil fuels,” says Richard Hill, President/Lead Advisor at Compass Financial Group in Raleigh, North Carolina.
The domestic energy companies already benefitting from the current administration’s stance have the making for a signature policy statement in President Trump’s second term. “Look for Trump to make the second 4 years his ‘Legacy’ making years,” says Brian Halbert, VP Retirement Services at WD Pensionmark in Austin, Texas.
The Financial Sector
Here’s where the White House efforts to rein in burdening regulations has seen the greatest benefit.
“Trump has been very lenient in his interpretation of the Dodd-Frank Act and passed legislation to weaken it,” says Hill. “The bill was passed by President Obama in the wake of the Great Recession and designed to increase oversight on banks and financial firms.”
Banks and financial firms will no doubt be under increased pressure should the Democrats seize the presidency. Brown says, “Financial equities will be relieved to see that Trump’s less stringiest rules, such as his Department of Labor’s new rule, will go into effect versus Biden’s unknown proposals.”
The Healthcare Sector
Similarly, this sector may also dodge a bullet under a second Trump term. In addition, the current administration has shown creative ways to expand and encourage growth in the medical and pharmaceutical industry.
“Healthcare stocks may also enjoy a surge if Trump wins,” says Brown. “Companies would then know they wouldn’t have to compete with a ‘public option’ that Biden said he would push to implement.”
The Aerospace/Defense Sectors
This would normally be the “go-to” industry under any Republican administration. “Defense typically does well under Republican stewardship,” says Craig Kirsner, President of Stuart Estate Planning Wealth Advisors in Coconut Creek, Florida.
Jason Field, Financial Advisor at Van Leeuwen & Company located in Princeton, New Jersey, says, “Republican Presidents usually lean towards military spending which could help some of the aerospace and defense areas.”
Of course, President Trump has been quite vocal about avoiding the unnecessary use of military forces. He has undertaken controversial orders bringing American troops home.
“You would expect Trump to benefit defense but he has been the only president in my lifetime not to start a war so that is up for debate,” says Rob Schultz, a financial planner in Encino, California.
There’s one thing to consider, however. With the present push to pass a second stimulus, President Trump may prefer to direct spending to help counter the economic impact of the Covid shutdowns and defer military spending.
“You could argue defense is helped under Trump, but with deficits where they are, it’s unlikely that money will continue to flow in that direction,” says Tim Barron, CIO of Segal Marco Advisors in Chicago.
The Technology Sector
This one is a little bit iffier, given all that is happening across the entire sector. Clearly, some companies have greater support than others, and there might be bipartisan agreement to target specific companies. Still, there are broad infrastructure considerations here that could boost this sector (and beyond).
Kirsner says, “In the short term, the investments that will benefit more from a Trump victory vs. a Biden victory would be expansive sectors such as steel, technology and defense. The reason for this is that a Trump win would be good for business and the economy so growth sectors should benefit.”
With Congressional hearings threatened or pending, it might be a good idea to be careful with social media companies. “Large tech firms such as Facebook and Google have been targeted by Democrats,” says Hill. “Biden is supportive of using anti-trust legislation to investigate anti-competitive practices which Trump has not been in favor of.”
Anything But China
Under a second Trump term, expect to continue to see economic pressure placed on China and any companies dealing with China. “If Trump wins, you probably don't want to have a lot of exposure to China as he might ramp up his stance on China in his second term to cement his legacy in that matter,” says Kirsner.
In fact, depending on what you believe from both candidates, there is an argument to be made that it’s best to avoid China regardless of who wins the election.
“China is the big one, with a presumption that trade difficulties will accelerate with Trump and decelerate under Biden,” says Barron. “Both parties cast China as a villain with a cry for making more products in the U.S. While some believe that the Trump approach will involve more stick and Biden’s more carrot, speculating on how Trump seeks to assure his legacy is a low-probability bet.”
For all this nitpicking on specific industries, it’s important to remember it’s all speculation.
“When you radically alter your long-term portfolio because of current events—even when you tell yourself it’s ‘just this once, and just briefly’—you're not investing anymore. You’re gambling,” says Humphrey G. Thomas, CEO of HG Thomas Wealth Management, LLC in Brownsville, Texas. “Once you crossed that line it will be hard to go back.”
By Chris Carosa, Senior Contributor
© 2022 Forbes Media LLC. All Rights Reserved
This Forbes article was legally licensed through AdvisorStream.