Is Your Portfolio Aligned for Clinton or Trump?


An unpredictable election provides uncertainty for stocks, which is never a good thing. The S&P 500 has recently broken a record for falling the highest number of consecutive days since the 1980s. At that time, the U.S. had experienced unprecedented stagflation as a result of increasing interest rates which led to the landslide election of Ronald Reagan, one of the Republican Party’s most endeared members. In general, (since the Great Depression) Democrats have provided better market returns with a total return during a 4-year term of 57.44% vs 16.61% for the Republican Average. (This data is skewed by Herbert Hoover’s -77% return, FDR’s 205% return during his first term and -40% during his third term. Additionally, more Republicans have held office in the second half of that period and our economic growth has plateaued as the world’s leader, with lower room for growth).

Analysts have come out to support both sides, but an overwhelming majority within the business world do not see higher performing securities with Trump as president. Moody’s Analytics said a Trump presidency would weaken the economy and land us in a recession with a 7% unemployment rate. These findings are based on the statistical analysis of policies that he wished to implement, including trade tariffs. Others have called Trump’s contrarian view admirable, such as Peter Thiel, the co-founder of PayPal.

Either way, different sides support a different leader. The basic material sector stands to gain a lot from a Trump presidency that has plans for high import taxes on Chinese goods. For example, this will help the steel industry that is shocked by an oversupply of cheap Chinese steel. Meanwhile, most of the technology sector is afraid, and Peter Thiel is a rare breed of Silicon Valley supporting Donald Trump. Donald Trump has called out Mark Zuckerberg for the “closing of the internet.” Energy stocks such as Exxon also forecast better returns, as they traditionally do under Republican presidents that support tax subsidies on fossil fuels. Meanwhile, the Democratic Party has generally favored green and renewable energies and has looked for economic growth and sustainability driven by solar and wind power. Industrials are generally split between the two parties.

Stock analysts see three sectors for growth under Hillary Clinton; renewable energies, pharmaceuticals, and financials. Renewable energies have been a large part of Clinton’s campaign who has even called out coal miners and seen recent support from that worker community. Pharmaceuticals and financials seem to be backed by Clinton who has spoken to senior members of both industries and has generally supported policies that favor these sectors. Recently, with controversial topics such as Mylan, the banking industry has called for stricter regulation which CEOs of companies have called “suffocating.”

Overall a Clinton presidency would most likely benefit your overall portfolio more, although if you are overweight on basic materials and energy you may see better returns under Trump.