Investment Implications of the Elections
The elections are finally over. We find that it is policy, not politics, that matters when it comes to investing. With President Biden now in the White House, supported by a narrow Democrat majority in Congress, new policies could impact how markets and your investments react.
Here are the major themes that we see:
- Increased government spending
- New approach to foreign relations
- Economic recovery
- Inflation pressure
Our top portfolio ideas in this environment include the following:
- Diversify - We recommend balance and diversification, both to manage downside risk and seek multiple sources of return.
- Seek relative value – We have identified asset classes that we believe offer value relative to other investments and to their historical prices. We think small- and mid-cap stocks, value stocks, and foreign stocks are attractive.
- Plan for inflation – We believe the risk of inflation is rising, so we want some exposure to investments that might benefit as the economy recovers, such as commodities and real estate.
- Target tax-free income - Municipal bonds are attractive in our opinion.
- Benefit from trends – We believe innovative stocks in the health care and technology sectors are attractive. Additionally, we recognize the benefits to socially responsible investing.
There are also implications for financial planning. Now may be an excellent time to speak with your advisor about:
- Retirement planning
- Estate planning
Signet is here for you. For questions or assistance with your investment planning or to discuss the points in this article, please speak with your advisor. For those not yet working with Signet, please let us know if we can schedule a free portfolio review.