Ride Trump Train to Prosperity

And How to “Election-Proof” Your Portfolio [The Daily Reckoning] August 30, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Ride Trump Train to Prosperity Atlanta, Georgia Editor’s note: The November election is still over two months away, but betting markets are trending toward Trump. How should you invest your money if Trump wins? Today, “Moneyball Economist” Andrew Zatlin shows you how. [Andrew Zatlin] ANDREW ZATLIN Dear Reader, We’re still over two months away from the election but it seems likely that Donald Trump will be elected president. Of course, nothing is written in stone when it comes to election results (ask Thomas Dewey) and the emergence of challenger Kamala Harris with her campaign of “joy.” But I believe Trump is still the favorite to win a second term. It’s also very likely that Republicans will sweep Congress, providing minimal pushback for Trump’s economic and trade policies. With that in mind, let’s revisit investment ideas for a second Trump term. Trump will double down on his “quid pro quo” style of governance, both domestically and internationally. He did this upon being first elected when he told NATO they wouldn’t get a free ride under his watch. Under the Biden administration, more countries have taken advantage of the generosity of the U.S. Trump will aim to reverse this. This could secure more favorable terms for the U.S. in various agreements and alliances. Also, the federal government is currently facing budget constraints, as 72 cents of every dollar is already committed to mandatory spending (social programs and interest payments) before discretionary spending can be considered. Given the unsustainable financial position of the U.S., there are three key areas Trump is likely to focus on: - Reframe defense spending as a revenue generator by charging allies for military protection - Boost exports to increase tax revenue without raising domestic taxes - Target health care costs, particularly by negotiating lower prices with pharmaceutical companies. Based on these anticipated actions, investors should consider the defense sector, export-oriented companies and infrastructure and domestic manufacturing. But investing in hospitals and pharmaceutical companies should be off the table as revenues will suffer in the health care sector. There are four specific actions you should take to prepare your portfolio for another Trump term: 1. You should actually be invested in the stock market. Even without the Trump factor, the stock market has been moving higher. And potential interest rate cuts in September can only make it go higher. The economy is slowing down but Trump’s economic and trade policies could turbocharge the economic environment. This could be a repeat of 2016, where after multiple quarters of weakness, Trump’s economic and trade policies boosted the market. One easy way to be invested in the market is to buy an S&P index fund and walk away. 2. The Trump tax plan expires next year. He’ll renew it, but he might also make some changes. Basic things like raising the cap on mortgage deductions and raising the state and local tax cap would put money in the pockets of households. I predict Trump will start currency wars with Japan and China. He wants a cheap dollar. This translates into more exports and more jobs for Americans. Trump was not happy about how currencies were being gamed by our trading partners in 2016. He will be furious with the current situation. Trump could go on a trade warpath. This could include sanctions on China and shutting off aid to Ukraine. This will slow the economies of our trading partners. Trump will do everything he can to bolster American manufacturing and reduce regulatory burdens. I suggest buying Japanese yen bonds and avoiding stocks with high international sales exposure, especially in Europe and China. 3. Invest in defense stocks. These could benefit hugely from Trump’s policies. Trump showed in his previous term that he’s a major weapons salesman. Going forward, the price for U.S. support will be buying American military hardware. 4. Look at companies that benefit from stricter immigration policies. These include private prison operators and manufacturers of law enforcement equipment. Trump’s riding an anti-immigration stance and has said he will not just slow immigration, but also deport undocumented people. This will require more infrastructure such as more holding cells, prisons, cameras and weaponry. Remember… Trump’s first term witnessed a notable rise in the stock market, driven by a combination of tax cuts, deregulation and pro-business policies. The Dow returned 56% during the Trump presidency, the best performance for any Republican president since Calvin Coolidge during the roaring 1920s. Take advantage of the sectors mentioned above and enjoy the ride in Trump’s second term. Below, my colleague Zach Scheidt shows you how to “election-proof” your portfolio, no matter who wins the election. Read on. Regards, Andrew Zatlin for The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) Editor’s note: Every day, 10,000 people reach retirement age in America... But according to statistics – only 12% of these people actually have enough money to retire. That means 8,800 people leave their retirement dreams behind — every single day. And considering the state of our economy — this problem is only getting worse. 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[Click Here For Exclusive Urgent Access]( The Daily Reckoning Presents: It’s time to get “defensive”… ****************************** Election-Proof Your Portfolio By Zach Scheidt [Zach Scheidt] ZACH SCHEIDT As the presidential election season heats up, I often find myself thinking, How could the outcome affect different areas of the market? You’ve probably asked yourself the same question at some point over the last few months, too. Before you get the wrong idea, no, I’m not about to wade into politics. That’s not my focus. And I’m sure you’ll be bombarded with political messages over the next few months. So I’ll spare you my personal thoughts. But as investors, we have to stay on top of how different administrations could influence the stock market. With that in mind, I will share one election prediction with you. There’s one sector that I believe will trade sharply higher during the next administration — regardless of who wins in November. Last November I issued my annual investment forecast for the coming year, which I said at the time was sure to be full of wild cards. But as I explained, increased U.S. military spending was all but guaranteed, given the ongoing war in Ukraine and the then-recent conflict in Israel. Yes, disagreement over how much spending was appropriate nearly led to a government shutdown last year. But it seemed unlikely that the U.S. would meaningfully reduce its defense budget with two ongoing conflicts requiring the country’s military support. Now roughly nine months after my annual investment forecast, does the presidential election change anything? In a word, no; all signs point to even more spending on defense. Allow me to explain… Investors typically view the Republican Party as more favorable toward defense spending. That’s because conservative politicians are usually more outspoken on topics like border security, national defense and military assistance for our allies. But these views have blurred over the past few years. Under the Biden administration, our military resources have been used excessively. In supporting both Ukraine and Israel, the U.S. has supplied munitions and defense systems to the tune of tens of billions of dollars. And the more resources we send overseas, the more that needs to be replenished back here in the United States. Meanwhile, the political sphere is a minefield elsewhere in the globe, including a possible need to defend Taiwan against China or escalating violence in the Middle East. So if Kamala Harris has a shot at winning the presidency — or even taking over Biden’s position ahead of the election — we can only assume that her policies will follow Biden’s. In other words, it means sending billions of dollars in military support overseas and then spending billions more at home to bolster our own resources. This strategy is certainly good for defense contractors and paints an optimistic picture for investors in this area. But would a Trump presidency or Republican sweep of Congress lead to a different outcome? Trump pointed out that there were no new wars during his presidency and has proposed to negotiate a quick end to the Russia-Ukraine war if elected. You might think that the end to this war would lead to less military spending and be a negative for defense contractor stocks. But the truth is that Trump (and other Republicans, for that matter) tend to lean toward the classic Roosevelt ideal of “speak softly and carry a big stick.” While political and economic negotiations may keep the U.S. out of a hot war under a Trump administration, peace through power would still continue to drive military spending. So for the foreseeable future, military spending is likely to be robust, regardless of who wins the next presidential election. [Urgent: Claim Your Copy Of This New Book From America’s #1 Retirement Expert!]( [click here for more...]( Forget everything you’ve ever been told about retirement. According to [this new book]( – written by America’s #1 retirement expert – you don’t have to wait until you’re 65+… and you don’t need millions of dollars. [The strategy you’ll find outlined inside this book]( is completely different… All you have to do is tap into the little-known income streams revealed inside this book… And you’ll learn exactly how you can generate almost effortless income every month… instantly, in some cases! And today, for a limited only, you have the chance to claim a copy of this book for just $1. [Click Here To Claim Your Special Book Offer]( What about the overall economic picture heading into the election? Next month, the Federal Reserve is finally expected to start cutting interest rates. In anticipation, yields on everything from savings accounts to Treasury bonds are starting to slide. For income-focused investors like myself, this presents an obvious challenge. And I’ve gotten questions from readers, friends and family about what to expect. But as I'll explain in a moment, this seasonal change actually creates an opportunity in one of my favorite areas of the market — dividend stocks. Let's start with the problem at hand. When interest rates fall, the yields on "safe" investments like money market funds, CDs and government bonds tend to follow suit. For example, let's say you have $100,000 parked in a money market fund yielding 5%. That's $5,000 in annual income. Not too shabby. But what happens when rates drop and that yield falls to 3%? Suddenly, your annual income has shrunk to $3,000. That's a 40% pay cut! This is the predicament many income investors find themselves in during a falling rate environment. The steady stream of income they've come to rely on starts to dry up. This is the harsh reality that many income-seekers are about to face. But that’s when dividend stocks really start to shine. Unlike the roller coaster ride of interest rates, dividends from strong companies tend to be remarkably stable – and often grow over time. Many quality dividend stocks have solid track records of steady, growing payouts. It's like having a raise built into your investment. These stocks tend to hold their long-term value in any interest rate environment, assuming their underlying business remains healthy. And lower interest rates can act as an additional tailwind for these companies. For one thing, falling rates will lower borrowing costs, which should help stabilize profit margins and free up more cash flow for dividends. Management teams that prudently hoarded cash during uncertain times may decide to reward shareholders with higher payouts once the coast is clear. Better yet, as interest rates fall and yields on "safe" investments like bonds and money market funds shrink, yield-hungry investors start looking elsewhere. Where do they turn? You guessed it — dividend stocks. This influx of investors can drive up the prices of dividend-paying stocks, leading to significant capital gains on top of your dividend income. It's a double boon of returns that can really supercharge your portfolio. So what should you do as we head into this new season? Consider shifting some of your assets to high-quality dividend stocks with strong fundamentals and histories of dividend growth. Above all, be patient. The true power of dividend investing is revealed over years and decades, not weeks or months. It's not about getting rich quick. It's about building a steady, growing income stream that can support you through all kinds of market conditions. As the Fed prepares to pivot and the income landscape shifts beneath our feet, dividend stocks are poised to shine. They offer a perfect combination of steady income, potential growth and a hedge against falling interest rates. So don't wait for the Fed to make its move. The time to position your portfolio for the coming low-rate environment is now. Regards, Zach Scheidt for The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) Ed. note: Every day, 10,000 people reach retirement age in America... But according to statistics – only 12% of these people actually have enough money to retire. That means 8,800 people leave their retirement dreams behind — every single day. And considering the state of our economy — this problem is only getting worse. But according to world-renowned economist Jim Rickards, you aren’t hopeless... [There is ONE thing you can do — right now — to maintain a financial edge.]( And if you do NOT already have three or four powerful income streams... Then we highly suggest you [watch Jim’s presentation.]( Because nearly nine out of 10 Americans do NOT have enough income right now. And as it stands... This may be the only way to change that. [Go here now.]( Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) [Andrew Zatlin] Andrew Zatlin created a system that leverages “oddball” economic data for real-world investing and trading. His eerily accurate forecasts for jobs data and economic output have been picked up by The Wall Street Journal, who calls him the “Moneyball Economist” and reporting that his data is “knocking it out of the park” for investors. He founded SouthBay Research, a data analytics firm leading the effort to bring the right data to institutional investors. In addition to providing his “record-beating” data and research to some of the world’s largest banks and hedge funds, Andrew is now offering it to “mom and pop” investors. --------------------------------------------------------------- [Zach Scheidt] [Zach Scheidt]( is the editor of Lifetime Income Report and Income on Demand — investment advisories dedicated to finding Wall Street's best yields. He brings to the table impeccable investment management experience and a solid record of identifying oversized payout opportunities. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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