Editor's note: This story was originally published in November 2015. With Donald Trump having been elected president of the United States, it's worth taking another look at where you should be investing when he arrives at the White House. Introduction has been updated with new information. Also, check out what Donald Trump's policies will mean for the U.S. economy.
Donald Trump in the White House might be 'uge for some stocks.
On the campaign trail, Trump exhibited a doomsday view of the current stock market. "Be careful of a bubble because what you've seen in the past might be small potatoes compared to what happens," he said in his campaign announcement speech in June.
In a subsequent interview with The Hill, Trump reiterated his bubble theory and warned that Americans are "being forced into an inflated stock market and at some point they'll get wiped out." And in April, he said he still wasn't seeing anything better, warning that the U.S. is headed for a "very massive recession" and that "it's a terrible time right now" to invest in stocks.
But if Trump wants to make good on his "make America great again" promise, he'll likely have to make sure the stock market keeps buzzing along -- which, according to some, is feasible.
"If Trump wins, or, frankly, any other Republican, they're all talking about making economic growth their number one priority," said Michael Busler, public policy analyst and professor of finance at Stockton University. "What somebody pays for a share of stock is based on their anticipation of the future earnings of the company, so since we'll have growth, leading to more earnings, that should lead to higher stock prices."
The billionaire real estate magnate and Republican presidential candidate has apparently done well with his own investments. When he originally launched his bid, a filing with the Federal Election Commission revealed the Donald made about $27 million on 45 stocks he sold in 2014. As president, he would have to put his stock-picking days behind him and park his investing cash in a blind trust.
Trump outlined a number of policies to varying degrees of detail during his campaign that would impact both the economy and the stock market in one way or another. He has promised massive immigration reform and a repeal of Obamacare. He has pledged to reform the Veteran's Administration, get tough on trade deals, and protect Second Amendment Rights (in fact, he might be carrying a gun right now).
He has also promised upwards of $11 trillion in tax cuts, which would likely lead to a bigger deficit and interest rate hikes from the Federal Reserve. "If the government cut taxes by $10 trillion, it would be a massive short run injection," wrote Austan Goolsbee, an economist at the University of Chicago's Booth School of Business and former Chairman of the Council of Economic Advisors in Washington, D.C., in an email. "Facing such a move, the Fed would likely try to limit the overheating from such a big stimulus by raising interest rates."
To be sure, there are no guarantees Trump will do all that he says once in the Oval Office. He will also have to get his proposals through the Republican Congress as well, which might not be extremely tough. If he is successful in enacting his plans, the economic implications will be significant, as will market impact.
Here are six stocks where investors might want to go long now that Donald Trump is president-elect:AAPL data by YCharts
Trump's tax plan calls for the lowest earners to send a one-page form to the IRS saying, "I win." But they won't be the only ones declaring victory should his proposals be enacted. Major corporations would have a lot to celebrate as well.
Under Trump's plan, no business of any size would pay more than 15% of their business income in taxes. Corporations would no longer be able to defer taxes on income earned abroad as they do now; however, a foreign tax credit would guarantee no company would face double taxation. And, Trump would enact a one-time repatriation tax holiday at a 10% rate.
That means companies holding lots of cash abroad such as Apple (AAPL) would finally bring their money back to the U.S.
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"This is a big deal," said Alan Cole, an economist with the Center for Federal Tax Policy at the Tax Foundation, a non-partisan research think tank, based in Washington, D.C.
According to a 2015 study from Moody's, Apple currently has more than $150 billion parked overseas -- nearly 90% of its total cash -- and today, that number is closer to $200 billion. And given that it recently expanded its capital return program to $250 billion, it would likely appreciate the opportunity to bring some of its funds back stateside. Not to mention the European Union's probe into its tax deals in Ireland.
"The point is, if Donald Trump were successful, multinationals like Apple, Google, they wouldn't have to try to use the tax system to hide their profits in other countries," said Merrill Matthews, resident scholar at the Institute for Policy Innovation, a Texas-based, right-leaning think tank.
While Trump would create a positive tax environment for Apple and companies like it, he appears to have a personal vendetta that might impact the company and his dealings with it. On the campaign trail, Trump has called for a boycott of Apple products and said he would force it to start "building their damn computers and things in this country instead of other countries." Billionaire activist investor Carl Icahn, who is backing Trump, announced in April he had dumped all of his shares of Apple after being one of the company's most boisterous proponents for quite some time.
But even if Trump doesn't particularly care for Apple (although he does still often tweet from an iPhone), his tax plan to drop the corporate tax rate to 15% from 35% would benefit it, beyond his repatriation plans.
"That would totally be a huge boon to shareholders ... from a profits perspective," said Cole. "Right now, [corporations] are only keeping, as a margin, 65% of their profits right now, that could go up to 85% if the tax rate drops to 15%. That's a pretty big deal. That would substantially change the valuation of stocks."
But a simplified tax plan wouldn't be great for everybody -- i.e., tax preparation firms, accountants and lawyers. "You don't need H&R Block anymore, you don't need expensive tax lawyers anymore," said Busler.