The results are finally in. As crazy as it has been, the political climate is set, and people can finally start making informed plans to live under the new federal government.
There have been tons of predictions about how Trump will change the economy, so it’s time to take a close look at what is likely to change and how it should impact your investment strategy. These are the areas that stand to change the most.
Hedge Funds
Some of Trump’s most vocal stances have been in relations to hedge funds and managed trading. There is good and bad news in this sector.
On the positive side, there are no capital gains tax hikes coming any time soon. This means accounts that have been moving stocks quickly to optimize profit can continue as they have, and they can expect the same returns they’ve seen for the past three to four years.
On the other side, Trump has called for reevaluating taxes on account managers. This could translate to fee hikes on hedge funds, but it is unlikely to be enough to affect their viability. It’s something that has the potential to sustain the slow drift away from managed investing, but retirement accounts that are tied into major hedge funds are safe for the foreseeable future.
In short, hedge funds can still make money, but they might not be the biggest winners any more.
Interest Rates
Market news has been underwhelming but still overall positive all year, and the Fed has still been shy about interest rates. You can expect that to continue in the early stages of Trump’s presidency. The next two meetings have a very low likelihood of seeing rate increases, and even the entire first year favors stagnate rates.
After the first year of Trump’s presidency has concluded, you can expect a reassessment, but for the next twelve months, low-rate investing will hold strong. This means gold and capital gains investing have excellent potential.
Energy
Domestic energy is slated for a comeback. Trump is a proponent of U.S. coal and oil, and the bulk of the GOP is on his side. You can expect Congress to back Trump on this, and loosen regulations for things like fracking.
There are two major results from this. First, energy prices are likely to stay low. This is good news for transportation, especially airlines. Second, the domestic production will reduce many of the negative impacts that low oil prices can have, since more of the money is staying within the borders.
Ultimately it’s a net gain for America, and investing in oil and coal production or major transportation is the best place to make money from these changes.
Foreign Markets
Immediately after Trump’s election, major players came forward ready to renegotiate TPP and NAFTA. The results of these negotiations are nearly impossible to predict at this point, but that uncertainty can predict markets.
Across the board, international markets will stumble while U.S. competitors flourish. This doesn’t mean you should completely abandon all foreign markets, but for the next two years, domestic investing will be generally safer.
Guns
This is actually one of the most predictable trends. Gun sales will suffer under a Trump Presidency. With 2nd Amendment proponents controlling all three branches, the risk of gun owner rights has completely faded. While that might sound like a good thing for manufacturers, it will actually lead to a large drop in sales.
The recent boom in this market correlated perfectly with each time Obama called for gun reform. Fear of losing rights fueled massive sales, and without that fear, the surges seen in the last four years won’t sustain.
Healthcare
This is the big one. There are a few key factors at play. The biggest good news for healthcare investing is that Hillary Clinton isn’t president and won’t be able to push for additional regulation in medical pricing. While this has a lot of implications for patients, it means the pharmaceutical industry is slated to continue their run on record profits.
Only barely less important is Trump’s stance on Obamacare. At this point, completely repealing the legislation seems unlikely. Instead, you can expect a slew of changes aimed at reigning in the runaway increases on insurance premiums.
This ultimately will lead to even more insured Americans, which leads to even more active participants in the healthcare system. America will continue to raise its spending, and there is no safer market with such high earnings potential under the new regime.
Regards,
Ethan Warrick
Editor
Wealth Authority
