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3 Ways To Invest Under A Trump Presidency

By Modest MoneyMarket OverviewJan 31, 2017 12:43AM ET
3 Ways To Invest Under A Trump Presidency
By Modest Money   |  Jan 31, 2017 12:43AM ET
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Donald Trump was elected as the 45th President of the United States on November 8th, 2016 and as he gets settled into his new role, there are plenty of investing opportunities to take advantage of. It was a surprising result for many and the markets have been trying to figure out how to react since that time. For the most part they have been up, rising roughly ten percent between the night of the election and the inauguration of the new President. Certain sectors are more optimistic about the new President than others and if you want to see the most profit from this transition then you need to look at these sectors to invest in.

The Defense Sector

Defense sector stocks such as Boeing (NYSE:BA) and Northrop Grumman (NYSE:NOC) are poised to do well under the Trump Administration, as long as President Trump follows through with beefing up our defenses. The new President has been a little vague on details but has promised to increase military spending. Considering he has a Republican majority Congress to back him up, Trump can likely get his pledged increase in military spending passed rather quickly. That is good news for the defense sector stocks as they are the ones who fulfill many of the orders for military equipment.

If one is to take a slightly darker view of the Trump Presidency, there is still some upside to holding defense sector stocks. Those who are cautious about this new President often state that they fear that his comments may start another war somewhere on the planet. This could be intentional or unintentional in their mind, but some of the loose talk could easily stir up trouble. If that is the case then once again the defense sector stocks would likely see a windfall of new business.

The Financial Sector

Financial Select Sector SPDR Fund Daily Chart
Financial Select Sector SPDR Fund Daily Chart

The financial sector has seen a major boost in prices since President Trump won the election back in early November and many attribute this to how he wants to deregulate the financial industry and lower corporate taxes. Both of these items will benefit the financial sector greatly as they have been held back since the financial crisis. The biggest item President Trump has talked about is reducing the impact of the Dodd-Frank bill that was implemented in the wake of the financial crisis and added strict regulations.

You’ll notice above on the daily chart of the Spyder ETF of the financial sector (NYSE:XLF) that shares skyrocketed in early November and have since been trending up. This is before anything has been implemented into law and if President Trump does decide to deregulate this sector, we could be in for much higher prices and earnings will likely pick up steam down the road for big banks. This is a great sector to keep tabs on if you’re looking to add something to your portfolio.

The Energy Sector

Energy Select Sector SPDR Fund Daily Chart
Energy Select Sector SPDR Fund Daily Chart

Drill baby drill! That might as well be the adopted motto of the Trump team when it comes to an energy policy. They want to work to open up new areas of drilling that have been previously restricted for one reason or another. They are also not too friendly to the alternative energy sector and will certainly not be encouraging the development of such energies nearly as much as the previous administration.

With new deals being allowed and new permits granted, expect the energy sector to see a boost in what they are able to do. Profits could go sky high as the companies reach into new areas and find more oil. In fact, in his first week, President Trump has already signed executive orders to negotiate the Dakota Access Pipeline and the Keystone Pipeline, which were previous blocked by the Obama administration. Trump’s pro-oil and coal rhetoric will likely lead to higher prices in this sector and is worth keeping an eye on.

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3 Ways To Invest Under A Trump Presidency

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3 Ways To Invest Under A Trump Presidency

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