I’m not sure if you know this, but the election is FINALLY EFFING over, what a suckfest the past year has been. I am not sure politicians got the memo, but junk mail, texts, calls and knocks on the door every DAMN day do not make people want to vote for you or help you out in the slightest. OR is that the introvert in me?

Either way, we have a new administration coming into power in Jan. Regardless how you feel about the winner (personally I loathe him, but his opponent was beyond awful as well), understanding the policies and mindset of Trump should help you with investing. Remember, emotions are not for investing, so let’s set our emotions to the side and analyze where we can profit shall we? We need to understand one HUGE thing, the Republicans control the Senate, the White House and probably the House and the courts. So pretty much anything Trump wants, he’ll get. Knowing this is key. Luke Lango (one of my FAVs) sent me this, so I’m passing it on to you, edited of course for what we do here at IIN.

1: Stocks Will Go Higher

With Republican control (most likely) 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%. Add it all up and investors should expect earnings to rise about 15% per year into 2026, creating a situation where further stock price gains regardless of valuations should occur. During Trump’s first term (pre-COVID), the S&P 500 rose 40% from January 2017 to December 2019.

2: Oil Should Stay Flat, But Inflation Could Return

Oil prices will likely remain flat over the next 12 to 24 months (which is awesome. I’ve always said a sideways market is my favorite), 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. However, in Trump’s first term we did not have all the tariffs he is proposing. The tariffs that are proposed will, make no mistake, cause prices to go up a shit ton. Who is paying, the company or the customer?

3: Interest Rates Are Also Uncertain

The path forward for interest rates and Treasury yields seems uncertain, as it will hinge largely upon inflation levels over the next few quarters. If Trump’s pro-economic and protectionist policies do create more inflation, which seems likely, then interest rates will not decline as much as the market expects. The market is currently pricing in four rate cuts into the end of 2025. If inflation does reheat over the next few months, we will likely only get two or three cuts, and Treasury yields will rise. If not, four-plus cuts remain on the table, and Treasury yields should fall. We will have to wait for more data from the early months of Trump’s next term before we can fully assess what inflation and interest rates could do.

4: Big Upside in Stocks Will Hinge on Inflation, Interest Rates, and Valuation

While stocks have good upside prospects over the next 12 to 24 months, spectacular upside potential will depend on the path forward for inflation and interest rates. If inflation stays low and interest rates keep declining, then valuation multiples on the S&P 500 will expand, powering strong upside in stocks. However, if inflation rises and interest rates stay high, valuation multiples on the S&P 500 will compress, limiting upside in stocks. Currently, stocks are trading at 20X forward earnings, adjusted for Trump tax cuts in 2025 (assuming the 4% boost estimate from Goldman Sachs). That implies a 5% forward earnings yield, which is still above the 10-year Treasury yield’s 4.45%. If Treasury yields stay at or below 4.5%, stock multiples can expand and drive additional upside in stocks (beyond earnings growth). But if yields climb toward and potentially even above 5%, multiple compression will limit gains.

This economic dynamic is arguably the most important of Trump’s presidency. And as of now, it’s unclear how it will play out. If inflation stays low and interest rates keep falling, stocks could rally more than 30% over the next two years. But if inflation reheats and interest rates stay high, stocks may only push marginally higher. It will become clearer in early-to-mid 2025 how Trump policies will impact the path of inflation. Until there is more data, you should continue assessing the monthly inflation data as it comes in.

5: Large-Cap Stocks Will Continue to Outperform

While small caps have outperformed in the day after Trump’s latest victory, history suggests that his tax cuts, tariffs, deregulation, and other economic policies are actually better for large caps. From 2017 to 2019, the S&P 500 large-cap index rallied about 43%, while the S&P 600 small-cap index rallied just 20%. In other words, the last time Trump was president, large-cap stocks outperformed small caps by more than 2:1. History suggests that large caps, which have led the market rally since late-2022, will continue to lead while small caps will likely continue to lag.

6: Growth Stocks Will Remain the Winners

Trump’s policies should stimulate economic growth, which means they should be good for growth stocks. In practice, this has been true. From 2017 to 2019, the S&P 500 Growth index rallied 58%, while the S&P 500 Value index rose just 27%. Similarly, the Russell 2000 Growth index rose almost 40%, while the Russell 2000 Value index rose less than 10%. In other words, across all market-cap spectrums, growth stocks outperformed value stocks during Trump’s last term.

7: ‘New-School’ Growth Stocks Should Be the Biggest Winners

While growth stocks have performed exceedingly well in this AI Bull Market, so-called ‘new school’ growth stocks – those of smaller, disruptive tech startups – have lagged. The best benchmark for these ‘new schoolers’ is Cathie Wood’s ARKInnovationETF (ARKK). Over the past two years, it has got crushed by the large-cap Nasdaq 100 index. However, in the first part of Trump’s first term, it was one of the biggest winners, with ARKK rising almost 150% from 2017 to 2019. This is likely because Trump’s economic policies were pro-innovation and pro-startup. Considering J.D. Vance’s connections to Silicon Valley and the startup tech world, the gains could come with even more momentum this time.

8: Clean Tech Stocks Will Crash; But Nuclear Stocks Could Surge

While the stock market surged higher today, not all stocks joined the party. Clean tech stocks crashed, led by double-digit declines across many solar, wind, hydrogen, EV, and energy storage stocks. That is because Trump will likely eliminate green-energy tax credits in the Inflation Reduction Act and push for a shift away from the deployment of clean energy across the U.S. While solar, wind, hydrogen, EV, and energy storage stocks are most likely the future, they could struggle under a Trump presidency. However, nuclear energy stocks are rallying today, likely because Republicans have broadly adopted a pro-nuclear stance. Nuclear could become the “go-to” clean energy source under a Trump presidency and because of this, nuclear energy stocks will perform very strongly over the next few years.

9: Financial Stocks Should Be Outperformers

As deregulation and stronger economic growth resulted in mad profit growth for financial firms, financial stocks were huge winners during Trump’s first term. The next few years should be a repeat of this. With Republican control of both the House and Senate, Trump will likely continue to deregulate the financial industry, leading to strong profit growth for banks, lenders, and other related firms.

10: Real Estate Stocks Could Struggle

Like clean energy, real estate stocks largely failed to join the post-election market rally, likely because of the interest rate risk we addressed earlier. A Trump presidency could mean higher interest and mortgage rates. And if that’s the case, the housing market, which has been frozen by high rates for the past two years, could remain frozen, regardless of how well the economy performs. If inflation data is good, real estate could flourish, if inflation is bad, real estate could be risky under Trump.

What does it all mean?

Focus on growth stocks in the tech, financial, and consumer sectors. BDCs
Mortgage REITs could be awesome, but not REITs that hold physical properties. ABR
American companies will have higher margins than foreign ones. Trump wants tariffs, and that in theory should stimulate American production. XOM
Deporting millions will result in a wonky labor market, so invest in companies with AI exposure. If the company doesn’t rely on people, the labor market issues are meaningless. NVDY
Private prisons, especially those that have immigrant detainment centers will flourish. GEO
Defense stocks should flourish. LMT
Crypto is going to pop off.
Dividend growth stocks should have higher margins with a significantly lower tax rate, meaning those you hold with solid or robust finances should flourish.
Most all breathe, the market goes up, no matter who is in control and making absurd decisions. If tariffs increase inflation and keep interest rates higher, there should be plenty of buying opportunities. If everything goes well, well we’ve created portfolios that should keep on giving. We mention risk mitigation all of the time here at INN, and we have built our portfolios to withstand risk. If you follow us, invest like us you’ll be fine. Some investments will go up and some will go down.
I would most definitely invest for higher inflation, this means things like gold or inflation funds like WIW.

10 Things You Need To Know To Profit Under Trump’s Presidency

1: Stocks Will Go Higher