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Investing Under Trump: How To Maximize Your Market Gains

Well, the election results are in. It seems that, come January, Donald J. Trump will be sworn in as the 47th president of the United States. And thanks to a sweeping ‘red wave,’ he will also receive ample support from a Republican House and Senate to execute his economic plans during the first two years of his term.  

Of course, that has major implications for both the U.S. economy and the stock market.

Today, stocks are celebrating this news. The market is rallying more than 2% across the board, paced by huge gains in tech and financial stocks, especially small caps. Cryptos are joining the party, too, with Bitcoin (BTC/USD) now surging to all-time highs. 

But despite today’s red-hot rally, investors and voters alike now face many unanswered questions. Will this party last – and if so, for how much longer? What about the future of oil prices, inflation, and interest rates? Which stocks should benefit most under Trump, and which will get hit hardest?

We’ve spent the last several hours dissecting these questions and parsing years of market data in search of answers. And that research has helped us to compile a list of 10 major market implications now that Trump is set to be our next president. 

So, without further ado, let’s dive right in to see how we should prepare for Donald Trump’s second term in office. 

1: Stocks Will Go Higher

With Republican control of both the House and the Senate, Trump should be able to extend and make permanent the 2017 Tax Cuts and Jobs Act. Those tax cuts should stimulate economic confidence and power more consumer spending and economic investment – the sum of which will drive corporate earnings higher in 2025 and ‘26. Additionally, Trump should be able to reduce the corporate tax rate from 21% to 15%, which Goldman Sachs estimates will boost EPS by ~4%. All up, we expect earnings should rise about 15% per year into 2026, creating a very compelling runway for further stock price gains regardless of valuations. Not to mention, during Trump’s first term (pre-COVID), the S&P 500 rose ~40% from January 2017 to December 2019. We think a repeat is possible.

2: Oil Should Stay Flat, But Inflation Will Be a ‘Wild Card’ 

We believe that oil prices will likely flatline over the next 12 to 24 months, with growth in U.S. economic activity balanced by headwinds related to increased domestic oil production. If prices hold around $70, inflation should remain between 2% to 3%. However, stronger U.S. growth in 2025-26 could present upside risks to inflation; though past trends under Trump in 2017-19 showed relatively stable inflation. As such, we view inflation as a ‘wildcard’ risk.

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