October 23, 2020

A peek at investing in a Trump or Biden economy

As November 3rd is fast approaching, we seem to be fielding more and more questions about how the presidential election will impact personal investments. I have personally seen this with many clients and decided to take a few notes to share with everyone. We face an important election with COVID-19 looming over the world, and the US economy still in recovery mode. Investors seem to have concerns based on whether another stimulus bill will get passed, their tax rates potentially going up, or what type of companies can survive a post-COVID world. This presidential election cycle has been as contentious as it ever has been, which causes fear in the investors’ eyes.

Regardless of what happens, there will be hope and optimism at some point. Whether it’s four more years of President Trump or newly elected President Joe Biden, we’ll move forward as a country and adapt to the policies put in place. Until then, we want to make sure you’re well informed on how either presidential term will affect the stock market and your investments.

We will start with President Trump and what four more years might look like. Before COVID-19, the unemployment rate was the lowest since the 1950s, and President Trump has been deliberate about our spending and trade deals. The economy was doing great because of this, and then COVID-19 hit; the economy tanked, and since March, we have been battling an uphill road to recovery. The economic numbers have rebounded tremendously but remain a concern today because there’s still no magic answer to the virus. In a second Trump term, we anticipate seeing more of the same, with deregulation on financials and very pro-energy. He plans to keep the corporate tax rate at 21%, which would fuel growth and job creation. Specific sectors of the economy would thrive in this environment, much as they have over the last four years.

Former Vice President Joe Biden’s plan is vastly different from an economic perspective but one should show similar results. ESG investing would likely boom in a Biden term. It has been steady in Trump’s term but could accelerate quickly under Biden, emphasizing eco-friendly policies. Biden plans to raise the corporate tax rate to 28% and increase taxes on individuals making over $400,000. This plan could raise 3.8 trillion in tax revenue over the next decade. But with added revenue comes investments in our country. Biden plans to create jobs by investing in infrastructure to rebuild America’s roads and bridges and upgrade 4 million buildings to the sustainability measures needed. This would create over 1 million jobs for Americans and help speed up economic recovery.

Regarding these plans, it should be very beneficial for companies in the materials sector. Biden would most likely increase regulation on banks leading to a lagging financial industry. He could look at breaking up the “Big Tech,” which would negatively affect the growth companies that have dominated the market over the last couple of years.

The purpose we see in this article is not to pick a side but to adapt and tactically invest according to the direction the American people decide we pursue. We see this as one of our clients' many added benefits while engaging in our investment advisory process. We are continually assessing the environment in which we are dealt and tactically investing to achieve the best overall return for our clients. If anyone has any further questions about personal financial situations or the prevalent issues our country is dealing with today.

Peyton Wade

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