Here’s how to invest for a Trump or Harris presidency: SA Election Forum

Next week’s presidential election is pushing investors to position their portfolios on the outcome of a tight race between Donald Trump and Kamala Harris. As in past elections, the best outcome will be a division of power among Democrats and Republicans in the White House, Senate and House of Representatives, said Chris DeMuth Jr., leader of the Sifting the World investing group on Seeking Alpha.

“Gridlock is usually good,” he said in a livestreamed discussion with Seeking Alpha’s Dan Snyder at the Seeking Alpha Investing Forum: Election 2024. “The times when our fiscal policy gets most off-track, when we have the real debacles that hurt enormous numbers of people, that really matter, is usually on something that’s not only non-partisan but almost ubiquitous in terms of political support.”

While the race for the White House is too close to call, DeMuth foresees a power flip in both houses of Congress that practically ensures a legislative stalemate. Such an impasse may help to prevent the spending blowout promised by both presidential candidates.

“On the spending half of the ledger, they’re both catastrophes,” DeMuth said. “We have two Government, big spending parties that are hard to differentiate.”

With both parties adding to the country’s debt, the only opposition they’ll likely face is from investors in U.S. Treasurys – or the “bond vigilantes,” as they’ve been described.

Regulatory Regimes

Investors most likely would feel the difference in regulatory policies between a Trump and a Harris administration, DeMuth said. Agencies such as the Federal Trade Commission, Department of Justice, Securities and Exchange Commission and Federal Communications Commission likely would become less activist under Trump than they have been under Biden.

“The silver lining I see on the Trump side, more than anything else, has been coming to light on the administrative side,” DeMuth said. “Unlike tax and spending policy which takes a very long time to cycle through the economy…regulatory policy really affects things the next day.”

While Sen. Elizabeth Warren, the Democrat from Massachusetts, has had enormous sway in the Biden administration, DeMuth said Trump might be more influenced by supporters such as Elon Musk, the Tesla chief executive and SpaceX founder who has proposed that the federal government become more efficient to improve U.S. competitiveness.

While the Trump administration started antitrust investigations of big technology companies such as Apple, Alphabet, Amazon and Meta Platforms, that doesn’t mean the FTC would be as activist in a second Trump administration. DeMuth said mergers and acquisitions likely would receive less scrutiny with Trump back in the White House.

Trump Stock Picks

DeMuth offered several stock picks that may move with the election’s outcome. If Trump wins, the Trump Media & Technology Group (NASDAQ:DJT) that runs the Truth Social app could jump in value, though it’s a risky call.

Another risky stock would be the initial public offering of Newsmax, a conservative media company some see as a pro-Trump alternative to Fox News. Like Fox parent News Corp, Newsmax faces litigation risk from voting-machine companies who claim they were libeled by the media companies during the last election.

Among DeMuth’s more “serious” stock ideas are re-privatized Fannie Mae and Freddie Mac, which help to make funds available for home loans. While they don’t originate mortgage loans, they buy loans made by banks and free up money for more loans.

Harris Stock Picks

While Harris has pledged to support energy production such as fracking, her administration likely would discourage investment to increase the supply of hydocarbons. DeMuth said Amplify Energy (NYSE:AMPY) is a likely beneficiary in a Harris administration because of its offshore drilling exposure.

DeMuth said he has made significant in two other companies that he recommends in the event of a Harris presidency. The first is Ponce Financial Group (NASDAQ:PDLB), a bank that focuses on the financing needs of minority communities, and Calumet (NASDAQ:CLMT), which makes specialty chemicals including lubricants, renewable fuels and solvents.

For investors looking to track the elections through market instruments, here are some politically driven Republican and Democratic exchange-traded funds:

• God Bless America ETF (YALL)
• American Conservative Values ETF (ACVF)
• Point Bridge America First ETF (MAGA)
• Democratic Large Cap Core ETF (DEMZ)
• Unusual Whales Subversive Democratic ETF (NANC)
• Unusual Whales Subversive Republican ETF (KRUZ)

Readers interested in investing topics tied to the upcoming election can find more information at the ongoing Seeking Alpha Investing Forum: Election 2024; please visit the event website.

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