With about a month to go until the 2024 presidential election, investors are bracing for potential volatility in the markets amid uncertainty over whether former President Donald Trump or Vice President Kamala Harris will win in November.
“It’s really important that everyone remembers that there is a lot of noise, there’s a lot of volatility around elections,” said Seema Shah, chief global strategist at Principal Asset Management. “Really what fundamentally drives markets is going to be what’s going on with earnings growth, what is going on with inflation and what the Fed is going to do.”
Differences in Republican and Democratic economic policies mean there are potentially nuanced ways for investors to position their portfolios to make money based on the election outcome.
“There will be certainly winners and losers coming out of this election cycle,” said John Mowrey, chief investment officer of NFJ Investment Group. “Depending on what happens with corporate tax rates, what happens with regulation and what happens with geopolitics.”
According to some experts, small-cap stocks could potentially benefit under a second Trump administration.
“If you look at after Trump was elected in November 2016, small caps in those initial months really performed well, double the performance of the S&P 500,” said Paul Hickey, co-founder of Bespoke Investment Group. “During his administration, the performance was right in line to slightly below large caps, but we didn’t have this really wide performance disparity that we’re seeing now between mega caps and everything else.”
Renewable energy is a sector that some analysts predict would benefit under a Harris presidency, as she seeks to build on the investments of the Biden administration.
“The biggest thing about Harris being in power would be protection and continued implementation of the Inflation Reduction Act, which is a key legacy of the Biden administration,” said Stephen Myrow, managing partner of Beacon Policy Advisors. “A lot of it hasn’t been implemented yet, but this is big for wind and solar, biofuels, nuclear hydrogen.”
Watch the video above to find out which sectors and industries stand to benefit the most under each presidential candidate, and what investors can do now to best position their portfolios ahead of the 2024 election.