Opinion: The stock market’s winners, losers post-election

Richard Baker

The No. 1 question I am being asked right now is what will happen to the stock market after the election. While no one knows for sure, some industries or sectors might do better under Republican or Democratic leadership.

Because of the potential policy differences, there could likely be market winners and losers depending on who wins the presidential election. The suggestions below of possible winners for each candidate would be more certain if that candidate’s party also swept the House and/or Senate.

Potential winners
According to LPL Research, the potential winners of a Kamala Harris presidency are Medicaid-exposed insurers, materials/gold, consumer staples, renewable energy/electronic vehicles, U.S. steelmakers, and emerging market equities/bonds. In contrast, banks and financials, defense, oil and gas, and small caps are potential winners in a Donald Trump presidency.

Potential losers
On the downside, according to LPL Research, a Trump win may be the most damaging to China’s economy, Mexico, electric vehicles and renewable energy. A Harris win could hinder the traditional oil and gas segment, banks and financials, small caps, Medicare Advantage-exposed insurers and long-term treasuries.

As of Oct. 30, the polls still have the election as a toss-up, but there are signs that investors are moving toward stocks that could benefit from a Trump victory. Many stocks considered Republican friendly, such as prison stocks, crypto-related companies and bank stocks, are performing well this month. The Wall Street Journal is reporting that many hedge fund managers believe that Trump’s policies could cause more inflation if he were to impose heavy tariffs on Mexico and China. There have been many hedge fund activity bets against the Mexican peso. I don’t believe the big hedge fund managers are making these moves out of political preference; they’re just trying to read the signs and markets.

Historically, investing based on political outcomes has been a bad idea. I suggest a more practical approach: Focus on fundamentals and long-term growth companies that are leaders in innovation over politics.

I don’t have any wholesome story to end this week’s article. I lost my biggest fan, my dad, Larry Baker, and we laid him to rest on Oct. 31. This week, the most important advice I can give you comes from a quote I ran across while sitting with him in the hospital: “Time is the only currency you spend without knowing the balance.” Use it wisely.

Richard Baker, an accredited investment fiduciary, is the founder and executive wealth adviser at Fervent Wealth Management LLC in Springfield. He can be reached at richard@ferventwm.com.