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Value Investor Daily #57
Election Spotlight: Which Stocks Will Be Affected by a Trump or Harris Administration?
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The presidential election is tomorrow and looks like a tightly contested race that will come down to the wire. It may even take weeks to settle.
The two sides have vastly different ideas about how to manage the economy, and the election's effects will be felt worldwide.
No matter your political leanings, the election will significantly affect the markets over the coming months. Let’s take a look at which stocks could benefit.
As of November 3rd, prediction markets have a probability of a Trump win of around 55.5%. The markets have already priced in those odds.
However, there are many swing states, and Harris is not out of the race yet.
Once the final election outcome is known, we'll still see some market adjustments from a Trump win and a slightly larger reaction if Harris takes office.
Trump intends to cut the corporate tax rate for companies manufacturing their products in the US from 21% to 15%.
This would be good news for overall corporate profits, especially for companies with a large US manufacturing base.
Some companies with the most extensive US manufacturing operations include Boeing (BA), Huntington Ingalls (HII), Tesla (TSLA), Intel (INTC), and Lockheed Martin (LMT).
Other stocks that would benefit include companies in the U.S. Manufacturing Select Index (MADE).
Trump also plans to increase oil drilling and production, which could boost exploration and refining companies. Companies such as Exxon Mobil (XOM), Peabody Energy (BTU), and Buffett favorite Occidental Petroleum (OXY) would stand to benefit.
Harris favors higher taxes on companies, including raising corporate tax rates from 21% to 28% and stricter carbon emission regulations, which could be good news for green energy stocks, including solar and wind power companies and electric vehicles.
Following a Harris win, GE Vernova (GEV), First Solar (FSLR), and Enphase Energy (ENPH) could benefit.
However, the real impact of all these policies depends on the balance of power in Congress. From an investor perspective, that’s where you want to pay the most attention on election night.
Historically, a Republican Congress has seen annual stock increases of 13.4%.
Over the last 95 years, during periods when the Democrats have controlled both the White House and Congress, the markets have grown by an average of 9.4%.
Historically, equities perform best when Congress is divided, with the S&P 500 showing average annual gains of more than 17%.
A divided Congress means there is less chance of sweeping policy changes. It would make it harder for Harris to raise taxes and stifle most of Trump's policy proposals.
Markets hate uncertainty. With a divided White House and Congress, you can be sure not much will change, which is typically great for stocks.
Thank you for reading today!
Happy Investing,
Value Investor Daily
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