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Trump vs. Clinton: How Various Sectors May Perform


Last week, a client called and wanted to know if there were moves that we should make in his portfolio before the election.  This is a really tough question, as we honestly don’t know at this point who will win the election.  A couple of weeks ago it looked like a sure thing for Hillary, but today it is anyone’s guess!

Based on that, I started thinking about what sectors would potentially do better depending on which candidate wins.  I tried to take personal feelings out of this as much as possible, and to base it on what the candidates claim they want to change, not what they can actually get done if they get elected.  This is my opinion only, and results are not guranteed. 

Healthcare and Biotech:

Trump win: Buy

Hillary win: Sell

This is the easiest one in my mind.  Hillary has been very open about criticizing the valuations and pricing in biotech.  In fact, the current biotech slump is partially attributed to a series of tweets she published about the sector being overvalued.  On the healthcare side, a Trump win probably means a shift in healthcare towards a less regulated marketplace.  Conversely, a Hillary win would shift towards more government regulation, and possibly a move further towards a single payer system.

Utilities:

Trump win: Buy

Hillary Win: Sell

Utilities are a sector that is know for being boring and reliable, but has also seen its fair share of controversy under the Obama administration over environmental issues.  A Hillary win could see further government regulations surrounding coal (an industry that has been largely destroyed in America over the last 8 years) and other forms of energy production that are deemed to have environmental impacts.  A Hillary win could also mean that Wall Street would rally, which usually results in a shift away from the safe sectors.  A Trump win could see Wall Street go into a cautious mode, where Utilities tend to thrive.  A Trump win could also mean opening back up the coal industry as well as less government regulation, which would be a good thing for Utilities. 

Consumer Cyclical:

Trump Win: Buy

Hillary Win: Sell

The consumer cyclical sector is where consumer goods and services that are dependent on the economy being strong are categorized.   They tend to do well when people (especially the wealthy) have more money to spend.  Think housing, entertainment, automobiles, etc…  Hillary’s plan is to raise taxes on the wealthy, raise the inheritance tax, raise capital gains taxes, and then offer specific tax credits to the lower income earners.  I don’t see any way that her plan can benefit the consumer cyclical sector.  Trump’s plan would lower taxes on the wealthy, and when the wealthy have more cash, they tend to spend on items that fall in the consumer cyclical category. 

Consumer Defensive:

Trump: Buy

Hillary: Buy

I put a buy rating on Trump for the perceived safety factor of these types of companies, and the same rating on Hillary because I think these stocks will rise with the market if she gets elected.

Energy:

Trump: Hold

Hillary: Hold

The energy industry is a toss up.  I always tell people that the president has way less control on the price of oil than the American people think he (or she) does.  Under Hillary, you could be certain that the environmental regulation on energy companies would increase.  She has also gone after them for “windfall profits” in the past, a term that politicians have made up to attack industries they don’t like.  She most likely would not approve any new pipelines, much like her predecessor.  What I worry about under Trump is his desire to manufacture in America.  If he is including the energy industry, that would mean that we would have to depend largely on fracking to produce our oil.  Fracking is a high cost method of obtaining oil relative to drilling, so this could actually affect what we pay for gas.  Oil is a commodity that is traded on a global market by global companies, so a move of this nature could really disrupt the energy industry. 

Industrials:

Trump: Buy

Hillary: Sell

This one is really easy.  Trump wants to bring manufacturing back to the US.  Hillary supports Unions, higher minimum wages, and pretty much every other reason that manufacturing has moved out of the US in the last 30 years. 

Financials:

Trump: Hold

Hillary: Buy

I think it is pretty clear which candidate has the support of the big banks on Wall Street.  It is the one that gives $250,000 speeches to them, not the one that doesn’t need them or their money.  That being said, I think financials will benefit from rising interest rates under either candidate.

Real Estate:

Trump: Buy

Hillary: Hold

Clearly, one candidate has made their money in this area, and the other one hasn’t.  That being said, I don’t think real estate suffers under Hillary, I just see Trump being more pro-development.

Materials & Communications:

I don’t see a clear differentiator here.