No matter what your political beliefs may be, Friday’s inauguration of President Trump was a momentous historical event. Few would have believed this possible a year ago. Trump supporters expect him to be one of the greatest presidents in history. His opponents are certain he will be one of the worst. As is usually the case, the reality will fall somewhere in the middle.
As a financial advisor, I try to determine how a new president’s policies might affect my investor clients. The reality is that as government policies shift, money will move. We just need to figure out where it is moving to and get there first.
Trump will be very different from Obama. His plans to shrink government and grow American business first and foremost, will result in dramatic swings in investment options. Without making any specific recommendations, let me just share some general feelings on where I think money may likely move over the next couple of years as the Republicans control all houses of government.
Energy. Clearly, we will see more favorable energy polices as it relates to traditional oil and gas producers. This would not only benefit these businesses but would likewise hurt alternate energy developers, who may see a significant shrinking of federal dollars and assistance. Trump is a businessman who believes companies should sink or swim based on markets, not government intervention, so any industry relying too heavily on subsidies and favorable policy may be at risk.
Banks. Trump thinks interest rates are too low for a healthy economy and so we should expect continued adjustments upwards. Since interest rates are the profit center of banks, higher rates would mean higher profits.
Healthcare. Healthcare has taken a hit since the election but mostly because of the uncertainty surrounding the future of the Affordable Care Act. Congress intends to immediately tackle this problem and regardless of how it plays out, you can expect a Trump presidency to move towards a freer market in healthcare.
Industrials. Protectionism isn’t all it’s cracked up to be and there are limitations that will prevent Trump from doing all he wants, but expect him to move in some ways to shore up American manufacturers. Ironically, among both Democrats and Republicans we are seeing a resurgence in the “buy American” attitude.
Materials. Any growth in manufacturing will create a greater demand for raw materials.
Gold and Silver. With a strong pro-business president, I see no reason to hold piles of precious metals, especially gold.
Technology. Though the industry did not generally support Trump, I believe that out of necessity he will support them, and allow some of the big players to repatriate billions in foreign funds through lower taxes.
Regardless of who wins the Whitehouse, it is always a day of great opportunity for investors as money moves. Just make sure you get in front of it so it moves towards you and not away from you.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 1173 S. 250 W. Suite 505, St. George, UT 84770.
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