While your long-term investment strategy shouldn’t change every four years, you may be able to maximize financial growth by investing in stocks that stand a good chance of winning out in the short term through tax policy, legislative changes, and other political actions. With a Republican administration in charge of Washington, it’s a good idea to review your portfolio and consider tweaking to reflect the industry sectors that typically thrive under conservative leadership.
Banking and finance:
- These businesses tend to do well because of the looser regulatory approach that conservative administrations traditionally prefer. Whether or not Dodd-Frank falls by the wayside, the financial sector is likely to perform well in the next few years.
- In the perpetual war between hawks and doves, the defense industry definitely sides with the hawks. That’s because conservative administrations have a long history of creating environments where major defense companies thrive. Your portfolio should probably include at least one big-deal defense investment – the names that handle the biggest military contracts.
- Republican administrations have consistently pursued policies that favor oil, gas and coal over renewable s like wind and solar. Subsidies for renewable face a questionable future, but there’s been not even a whisper of eliminating the substantial subsidies that give fossil fuels an edge in the market. Less focus on environmental regulations also boosts growth potential for this sector.
- Pharmaceuticals and biotech seem unlikely winners at first glance, considering the likelihood of ACA repeal. But like banking and fossil fuels, a diminished focus on regulation acts in the industries’ favor, especially considering the reduced chance of mandated price controls or price negotiations from the biggest buyer: Medicare.
- Despite current financial challenges and recent high-profile nuclear disasters, the nuclear industry stands to win out in the current administration’s policies. Less regulation coupled with an increased focus on domestic energy production inspire savvy investors to view the sector as one that offers high growth potential.
- Between lower taxes on businesses, broad interest in addressing the country’s infrastructure woes and the possibility of an enormous wall across our southern border, there’s a lot of room for growth in the construction industry. Building supplies and other construction-related investments hold appeal for many investors today.
- Manufacturing: Although domestic manufacturing has sometimes taken a hit under Republican presidents, the current administration has signaled its interest in shoring up this sector and taking actions to keep manufacturing jobs inside the U.S. There’s a high potential for incentives designed to support manufacturers who do keep jobs here, and that could spike profits across the industry.
Keep in mind that when it comes to Wall Street, there are no guarantees. Neither policies nor their effects can be predicted perfectly, and in every sector there are stronger and weaker players. Still, investing in an ETF or a handful of carefully chosen stocks from the sectors above may provide a good chance of benefiting your financial picture.
If you’d like to review your investments and overall financial picture, please contact Scarlet Oak Financial Services. We’ll help you figure out the best way you can benefit from a Republican administration along with their favored industries.
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This is general information that may not be suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this newsletter will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.