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In the weeks leading up to the 2024 presidential election, financial analysts speculated widely on the election’s financial ramifications. Now that we know Donald Trump is the president-elect, what does that mean for your finances? There are several potential impacts for investors and the stock market alike based on Trump’s proposed policies and priorities, which I elaborate on below. As always, I recommend consulting with your financial adviser for personalized advice. There is no substitute for a truly individualized financial plan.
A Recent Upswing
If you have been keeping up with the stock market, you have probably noticed that the upward trend over the past few months has continued after the election results were announced. Some stocks, such as Tesla (TSLA), have experienced exponential growth due to their close association with the Trump campaign.1 This trend is likely to continue in the short term, although investors should be prepared for market volatility across the board. As companies and investors react to policy shifts and changes in trade policy and tax strategies, expect some fluctuations in the market.
Future Tax Cuts
A major talking point of Trump’s campaign has been his tax policy. Historically, Trump has favored reducing taxes for corporations and high-income earners.2 If this same approach is taken in his new term, stock prices may rise because of potential corporate tax cuts and increased corporate earnings. This may be the prime opportunity to take advantage of portfolio adjustments in sectors that benefit from these tax cuts. For high-income earners, this may work out to be a double advantage; you may be able to capitalize on potential tax reductions for yourself, too.
Impacts Across Sectors
Fossil fuel industries have been favored by Trump in the past, and it is likely that he continues to favor oil, gas, and other traditional energy sectors in his second term.3 In this case, there is likely to be an upward swing in returns from these industries, particularly if Trump also reduces environmental regulations that have historically slowed the growth in these industries.4 Investors interested in growth-oriented industries may be well-suited to investing in this sector.
Tariffs, which were heavily implemented by Trump in his first term, will likely impact several sectors.5 These may include agricultural, vehicular, manufacturing, and technology industries. Depending on the range and reach of the implemented tariffs, domestic and international stocks may be affected. Investors in these industries may want to keep an eye on tariff announcements and international trade negotiations. Although we are certainly optimistic about decreasing inflation, tariffs could impact inflationary pressures. Investors with a significant percentage of fixed-income assets may want to consider diversification in the coming months if inflation becomes a concern.
Long-Term Strategies
Above all, I recommend staying focused on the long term. As I have been advocating for years, the stock market’s history is clear. There have been extreme downswings and buoyant upswings, but the market as a whole has consistently moved in an upward direction since its inception. I see no indication that it will suddenly fail to do so. While Trump’s policies may benefit certain sectors and harm others, keeping your portfolio broadly diversified will help you prepare for whatever the next few months bring. If you have any questions about your financial portfolio, contact our team today to learn more about individualizing your strategy. Call (469) 212-8072 or visit www.gdswealth.com to learn more.
1 CNBC, 2024; Business Insider, 2024; AP News, 2024
2 Institute on Taxation and Economic Policy, 2024; Tax Foundation, 2024; Committee for a Responsible Federal Budget, 2024
3 ChemAnalyst,2024; PBS, 2024; Reuters, 2024
4 New York Times,2020; Washington Post, 2020; New York Times, 2021; Los Angeles Times, 2024
5 New York Times, 2024; CNN, 2024; NPR, 2024;CNBC, 2024
Investing carries inherent risks, including market volatility, potential loss of capital, and uncertainty in returns, which investors should carefully consider before making any financial decisions. GDS Wealth Management is an investment adviser in Flower Mound, TX. GDS Wealth Management is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. GDS Wealth Management only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of GDS Wealth Management's current written disclosure brochure filed with the SEC, which discusses, among other things, GDS Wealth Management’s business practices, services, and fees, is available through the SEC's website at: adviserinfo.sec.gov.
The information contained herein is based upon certain assumptions, theories, and principles that do not completely or accurately reflect any one client's situation or a whole exposition of the topic. All opinions or views reflect the judgment of the authors as of the publication date and are subject to change without notice.
GDS Wealth Management does not provide tax or legal advice. You should contact your tax adviser, accountant, and/or attorney before making any decisions with tax or legal implications. All information is provided solely for convenience purposes, and all users thereof should be guided accordingly.
This communication contains certain forward-looking statements that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially. As such, there is no guarantee that any views and opinions expressed herein will come to pass.
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