As the 2024 U.S. presidential election approaches, investors are closely watching how the political landscape might impact their portfolios. Whether Donald Trump or Kamala Harris emerges victorious, certain sectors and stocks are likely to benefit. Here’s a look at some of the best investment opportunities for each potential outcome.
If Trump Wins
Energy Stocks. Trump’s presidency was marked by deregulation in the energy sector, particularly for fossil fuels. Companies like Exxon Mobil (XOM) and Chevron (CVX) could see significant gains under a second Trump term. Additionally, keep an eye on smaller, more agile players in the shale industry, such as Pioneer Natural Resources (PXD).
Defense Contractors. Trump’s emphasis on military spending could benefit major defense contractors. Lockheed Martin (LMT), Northrop Grumman (NOC), and Raytheon Technologies (RTX) are worth considering.
Financial Services. Trump’s administration was known for rolling back financial regulations. Banks and financial institutions like JPMorgan Chase (JPM), Goldman Sachs (GS), and Morgan Stanley (MS) might see reduced regulatory burdens and increased profitability.
Infrastructure. Trump has consistently pushed for infrastructure development. Companies involved in construction and materials, such as Caterpillar (CAT) and Vulcan Materials (VMC), could benefit from increased government spending in this area.
Pharmaceutical Companies. Trump’s policies have generally been favorable to the pharmaceutical industry. Companies like Pfizer (PFE), Merck (MRK), and Johnson & Johnson (JNJ) might see continued support and less pressure on drug pricing.
If Harris Wins
Clean Energy and Electric Vehicles. Harris’s focus on combating climate change could further boost the already growing clean energy sector. Consider companies like First Solar (FSLR), NextEra Energy (NEE), and Tesla (TSLA).
Infrastructure with a Green Focus. While both candidates support infrastructure spending, Harris’s plan emphasizes green initiatives. Look at companies that blend traditional infrastructure with sustainability, such as Brookfield Renewable Partners (BEP) and Eaton Corporation (ETN).
Healthcare Services. Harris’s plans to expand the Affordable Care Act could benefit health insurers and hospital operators. UnitedHealth Group (UNH), Cigna (CI), and HCA Healthcare (HCA) are worth watching.
Cannabis Industry. Harris has indicated support for federal decriminalization of marijuana. This could be a boon for cannabis companies like Canopy Growth (CGC) and Tilray (TLRY), though investors should be cautious of this still-volatile sector.
Technology with a Focus on Cybersecurity. Harris has emphasized the need for improved national cybersecurity. Companies like CrowdStrike (CRWD), Palo Alto Networks (PANW), and Fortinet (FTNT) could see increased demand.
Stocks That Could Perform Well Regardless of the Outcome
The First Investment to Consider: IWM
iShares Russell 2000 ETF
Big Tech. Despite facing scrutiny from both parties, tech giants like Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOGL) have shown resilience and continue to dominate their respective markets.
Consumer Staples. Companies producing essential goods tend to perform steadily regardless of political climates. Consider stocks like Procter & Gamble (PG), Coca-Cola (KO), and Walmart (WMT).
Healthcare Innovation. The healthcare sector, particularly companies focused on innovation and biotechnology, may thrive under either administration. Look at firms like Moderna (MRNA) and Regeneron Pharmaceuticals (REGN).
Investment Strategies to Consider
Diversification: Regardless of the election outcome, maintaining a diversified portfolio is crucial. Don’t put all your eggs in one basket, even if you’re confident in a particular election result.
Long-term Perspective: While elections can cause short-term market volatility, historically, the market has trended upward over the long term regardless of which party is in power.
Sector ETFs: For those preferring a broader approach, consider sector-specific ETFs aligned with the potential winner’s policies. This strategy can provide exposure to benefiting sectors while mitigating single-stock risk.
Dollar-Cost Averaging: Given the potential for market volatility around the election, implementing a dollar-cost averaging strategy can help mitigate timing risk.
Stay Informed: Keep abreast of policy proposals and their potential impacts on various sectors. Be prepared to adjust your strategy as the political landscape evolves.
While the outcome of the 2024 presidential election will undoubtedly impact the stock market, it’s important to remember that other factors, such as global economic conditions, technological advancements, and unforeseen events, also play crucial roles in stock performance. As always, consult with a financial advisor to align your investment strategy with your personal financial goals and risk tolerance.
Note: The author owns securities in some of the companies mentioned in this article.