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How investors could benefit from Donald Trump’s victory, according to experts
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How investors could benefit from Donald Trump’s victory, according to experts

There is one group that has consistently predicted without hesitation that Donald J. Trump would be the 47th president of the United States: the financial markets.

President-elect Trump is likely to have a big impact on the U.S. economy, and love it or hate it, it could provide money-making opportunities. The day after his presidential victory, the dollar index – which measures the currency against its major currencies, including the euro and the yen – rose 1.9 percentage points and Bitcoin hit a high record $75,000 as traders bet Trump’s promise to make America “the crypto capital of the planet” would be a good thing.

So if you want to take solace in his decisive victory, or want to toast what you think was the right decision, we take a look at how you could benefit from the fake tan lover’s re-election to the White House.

Invest in a technology company

Trump’s economic policy is based on deregulation and lower taxes. Experts say this will likely benefit tech companies.

“Under the Democrats, the regulator tried to attack GoogleApple, and in the future we expect that to disappear,” says Stephen Yiu, manager of the Blue Whale Growth fund, which is heavily invested in US technology companies.

“So the risks for some of these big tech companies — like Google breaking up, as was discussed under Joe Biden because there was concern that it was too big — have been removed,” he says.

Some people invest in the S&P 500 stock market – one of the US stock markets that lists the largest companies in the country and is traditionally dominated by the “Magnificent Seven” (Apple, Microsoft, Amazon, Alphabet, Tesla, Meta and Nvidia ) – to benefit from it.

One way to do this is to put your money in an S&P 500 ETF, which replicates the growth (or decline) in prices of publicly traded companies.

Some will follow the entire index, others will follow part of it, for example only financial or technology stocks. Vanguard’s S&P 500 UCITS ETF and iShares S&P 500 UCITS ETF USD both provide exposure to the entire index, while the iShares S&P 500 Information Technology Sector UCITS ETF focuses solely on technology companies.

It’s worth noting that there are tailwinds for the tech sector that Trump cannot control, including the threat that artificial intelligence poses to these companies.

“If you believe in Trump, the S&P is not a bad place, but you have to take into account that interest rates in the United States are likely to increase based on Trump’s plans and we will probably see the US dollar strengthen. “, adds Yiu.

“This is generally not helpful for the US stock market – in other words, I’m afraid.”

Invest specifically in Tesla

One tech company in particular could get a boost from its owner’s close connections and the future president: Tesla. Stocks jumped 12% Wednesday morning, adding nearly $20 billion to Elon Musk’s fortune following Donald Trump’s re-election as president, and bringing praise to the world’s richest person.

Musk appears likely to play a key role in Trump’s administration, and given his interest in AI and his interests in Tesla, that will likely be favorable for the electric car maker. You may think this is bound to have an impact on the stock price and choose to invest, but not everyone is convinced.

“My view on Tesla is that I don’t see how this is going to work in terms of Tesla’s business model,” says Stephen Yiu.

“If Trump decides to adopt a pro-Tesla car policy and impose tariffs on Chinese and European companies, then Tesla could get away with it because it will become more expensive to buy cars in other countries. But when you look at Tesla’s valuation, you really have to believe in Musk’s magic touch and the value he brings as a person.

“But when I invest, I want to look at the data and the business model and those things don’t support the stock price. So, essentially, if you invest in Tesla, you have to bet on Elon Musk.

You might also be betting on how long Musk and Donald Trump’s close relationship will continue, as Trump is not known for maintaining long relationships with colleagues and advisors.

Consider Bitcoin… if you’re willing to lose money

If you’re willing to lose every penny, you could think about Bitcoin. The value hit a new all-time high, reaching over $75,000 on Wednesday morning, breaking its previous record of just under $74,000 set in March.

However, before doing this, it is good to remember that because there is no underlying value, the price is usually based on sentiment, meaning its value can fluctuate wildly. Entering when the price of Bitcoin has reached new highs is a gamble and means you think there is room for it to rise, which may depend on whether Trump follows through on his pledge to invest more in it. active.

“Anyone buying Bitcoin as a little nudge towards the future turning into a crypto utopia just needs to make sure they are happy to take on considerable risk. Anyone who puts a large part of their wealth in Bitcoin should have a quiet word with themselves,” says Laith Khalaf, head of investment analysis at investment platform AJ Bell.

Buy individual oil, defense and banking stocks

AJ Bell also pointed out that banking, construction, defense and oil stocks could see their value increase under Trump. He sees US bank Citigroup as having good prospects, as it will likely benefit from looser regulation, lower taxes and keeping interest rates higher for longer.

He also thinks construction equipment rental group Ashtead is a good bet given Trump’s promises to boost construction and manufacturing businesses.

“Its long-term prospects should improve under Trump and recent hurricane cleanup work has boosted earnings,” said Dan Coatsworth, investment analyst at AJ Bell.

Coatsworth also recommends defense stocks such as BAE Systems, Northrop Grumman and Booz Allen Hamilton, as Trump increased defense spending during his first term as president and it is assumed he will do the same this time around. Oil stocks could also be a good argument if you’re not too concerned about the environment.

He says: “Trump loves to use the slogan ‘Drill, baby, drill’ and his election victory has given US oil producers a spark in the stock market. »

Kate Leaman, chief market analyst at investment platform AvaTrade, added: “A Republican victory will likely also mean less regulation and more support for fossil fuels, which will benefit traditional energy companies and pose a challenge to the renewable energy sector. »

Invest in small American businesses

Trump’s policies (such as increased tariffs on non-U.S. countries) could likely be positive for U.S. companies selling to Americans, as some of their foreign competitors could suddenly become more expensive.

Victoria Hasler, head of fund research at Hargreaves Lansdown, suggests people could consider using the Artemis US Smaller Companies fund to profit, although she cautions it is a long-term investment term, that is to say, you should not expect to make money quickly.

“The objective of the fund is to select smaller companies with potential for share price growth,” she explains. “Small businesses are often among the most innovative and offer great growth potential, but they carry higher risk than their larger counterparts.”