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5 Investment Themes of a Biden Administration

5 Investment Themes of a Biden Administration

| November 07, 2020
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Originally Published 11/07/2020

5 Investment Themes of a Biden Presidency


The Associated Press has declared Joe Biden the winner of the 2020 election and expected to become our 46th President in January. This means a new administration that will take different stances on many issues; however, we will highlight the 5 biggest investment themes we see in a Biden administration.  


Here are 5 major investment themes we expect from a Biden administration:


  1. Healthcare 
    • A Biden administration is expected to keep and expand the Affordable Care Act. This would favor health care as it may increase expenditures. This would be added to already favorable spending in this industry due to COVID 19. However, COVID 19 and increase regulation is not without increase costs and risk in this sector. Investors may want to consider increasing exposure to the healthcare sector.
  2. Energy
    • A Biden administration is expected to increase restrictions for fossil fuels and create more incentives for greener and renewable energy. This sector has already been hit hard due oversupply and lowering demand. Investors may want to limit exposure to fossil fuel energy companies.
  3. Global Investing
    • A Biden administration is expected to eliminate and reduce most of the foreign tariffs created under the Trump administration and create new trade agreements that may make it easier for foreign companies to do business here. It’s important to note the “Made in America” plan as well as the desire to use trade agreements to create more environmental restrictions could have a negative impact on foreign stocks as well. Anyone who has been underweighting foreign stocks in the previous administration may want to bring it back to their average weighting.
  4. Taxes
    • Biden campaigned on raising income taxes and is expected to roll back most of the Trump administration tax cuts. Investors with a high income may want to look a municipal bonds and other ways to reduce taxes in their portfolio.
  5. Long-term
    • Regardless of which person or party holds office in the United States, there is always one important investment theme: Take a long-term rational approach to your investments and not an emotional short-term approach.


How to use this information:


We believe your financial plan, which is based on your individual goals, time horizon and risk tolerance should steer your investments decisions, not politics. You should review your financial plan and your goals and make sure your underlying asset allocation and investment strategy is designed to help you pursue your goals.


If you are looking for help creating a long-term portfolio that is created based on your financial plan to help you pursue your goals, give us a call today at 412-357-2002.

 

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. The information is based on data gathered from what we believe are reliable sources. It is not guaranteed by LPL Financial as to the accuracy and is not intended to be used as the basis for any investment decisions. The information presented does not constitute a solicitation for the purchase or sale of any security and is not a recommendation of any kind. Please consult your financial advisor before making financial decisions.

All investing involves risk, including the potential for loss of principal.  Sector investments are subject to sector risks and non-diversification risks, which may result in performance fluctuations that are more extreme than fluctuations in the overall stock market. Municipal bonds may be subject to alternative minimum tax and state and local taxes. Investing in tax-free bonds may not be appropriate for investors in all tax brackets.  LPL Financial and its representatives do not offer tax advice. 

(11/20)

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