Forget about gaffes and scandals in this crazy presidential election between Donald Trump and Hilary Clinton: The issue bound to touch most Americans personally comes down to money. The market will respond to whoever is elected, so what does each candidate mean for investments?
Both candidates have sectors that could see tailwinds if they're elected. This is information you can use to plan portfolio and investment adjustments.
Traditionally, Republican candidates are viewed as pro-business, favoring free market, less regulation and lower taxes. Based on what we know of Trump and his platform, these sectors should see a boost if he becomes commander in chief:
- Coal and Fracking: This industry could potentially benefit the most under Trump's administration. It's likely that he will encourage more domestic production of coal, which could lead to a major cash-in for those companies.
- Oil: Trump is serious about oil; he wants the United States to become energy independent, so oil and natural gas companies could benefit at the margin. New pipeline construction and increased drilling would occur given reduced regulations, bringing more business to oil equipment manufacturers-another industry tier to watch as we approach November. We might also see the federal ban on U.S. oil exports lifted, meaning big business for American oil companies.
- Defense: Typically, you can bank on Republicans to be strong supporters of military spending. If Trump enters office next year, military contractors, weapon makers and aerospace equipment suppliers could benefit. In addition, increased tensions in the war on terror and a rise in U.S.-Mexican border patrols could give defense stocks a major boost forward.
There are sectors projected to lose, so beware of:
- Shipping and Freight: These stocks could see a loss under a Trump presidency, since his stance on higher tariffs and strict trade will put pressure on goods coming into the United States.
Democratic candidates commonly embrace laws and greater government support for public services and education. With Clinton as president, these sectors would be expected to rise:
- Alternative Energy: Clinton is passionate about renewable energy, an issue she's repeatedly advocated throughout her campaign. The market for alternative energy solutions like solar, wind, hydropower and geothermal energy would likely rise under a Clinton administration. Clinton will likely push for more green initiatives, which could spur investment in that market and boost renewable energy stocks.
- Hospitals and Health Care: It's no secret that Clinton is a staunch supporter of the Affordable Care Act (Obamacare). If elected, she plans expand the law, potentially benefitting hospitals, medical technology companies, managed care facilities and insurance providers. In tandem, greater access to preventative health care could help make universal coverage more cost-effective and affordable for consumers.
- Defense: This is one industry that could see a rise either way, no matter who is elected this fall. Hillary Clinton is serious about strengthening our military, and she has received more donations from defense industry workers than any other candidate thus far. Clinton has expressed her intent to further crack down on ISIS. Some believe she could be more aggressive with our military force than Obama, based on her experience as Secretary of State. As a result, the aerospace and defense sector would likely benefit under a Clinton presidency.
These are sectors to beware of:
- Hospitals and Health Care: On the other hand, healthcare stocks could be on the decline under Clinton, since as the Affordable Care Act brings more patients into the healthcare system who don't pay an adequate rate for their services. The government has not yet proven it will compensate insurers for losses due to this imbalance, so we should expect more pressure on healthcare issues should she be elected. And Clinton has said in the past that she would try to find a way to keep drug prices down.
Anything can happen in this race. For investors, the key is to stay on top of key issues, research strong investment sectors, which right now include defense and possibly oil, coal, alternative energy and hospitals/healthcare, make a plan for getting into ideal stocks -- and know when to get out.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.