I cannot recall an election where the losing side’s heads collectively exploded over the fear of what the president-elect would do. But many Americans are projecting their fears onto Donald Trump because there is nowhere else to put them.
For Heaven’s sake, when was the last time people took any politician’s words during a campaign seriously — particularly when they came in the early part of a campaign before the candidate even took himself seriously?
There’s a Yiddish phrase that says, “From worries come nothing.” In other words, worrying about stuff isn’t going to change whether something happens or not.
Even His Holiness, the 14th Dalai Lama, has said something similar.
I’ve told people to write down their worst specific fears, put them in a drawer and revisit it in 2020. They’ll discover that few, if any, of those fears came to pass.
I’ve outlined seven fears I think will fit that bill, as well as a number of stock picks that actually address reality.
Fear #1: Donald Trump will start a nuclear war.
No, he won’t.
A nuclear winter is bad for business, and the one thing Trump is about is business. He will, however, be strong on defense. Donald Trump loves America. Defending America means defending business. Terrorism and global instability are bad for business.
I believe Trump will press Congress to set aside a lot more money for defense. It’s not a novel play — everyone and their brother believes this will be the case. But it still stands to reason that you should take a close look at defense stocks.
The play on reality: You can buy the big individual names. But I prefer the PowerShares Aerospace & Defense (ETF) (NYSEARCA:PPA) to harness all of the gains that will be made in the space.
Fear #2: Donald Trump will dirty our air and water.
No, he won’t.
Trump may curtail the out-of-control Environmental Protection Agency, and insist on regulations that are reasonable.
He may also, hopefully, restart the coal industry here in America. Thanks to the current administration, some 83,000 coal jobs have been eliminated across some 400 coal mines. Coal stocks have lost roughly 80% of their value.
You can bet coal miners across the nation voted for Donald Trump.
The play on reality: It’s possible Donald Trump reinvigorates this sector, and if he does, the VanEck Vectors Coal ETF (NYSEARCA:KOL) is worth a glance. It’s actually off its all-time low, but it has so, so much further to go if the sector is revived.
Fear #3: Donald Trump will kill Dodd-Frank.
No, he won’t.
Trump will likely urge Congress to vastly scale back the Consumer Financial Protection Bureau, and relieve financial institutions of insanely complex regulations that are costing billions of dollars to implement.
Ask any banker how many more regulations have been instituted since Dodd-Frank, how many were truly necessary, and how much they’ve cost.
This should be good for all financial services, and consumer credit companies.
The play on reality: Buy the Financial SPDR (NYSEARCA:XLF) exchange-traded fund of large-cap financial stocks, Enova International Inc (NYSE:ENVA), Visa Inc (NYSE:V) and MasterCard Inc (NYSE:MA).
Fear #4: Donald Trump will give tax cuts only to the rich.
No, he won’t. That takes an act of Congress.
What we are more likely to see is a long-necessary cut in corporate taxes. Presently, U.S. corporations pay 35% tax, which is higher than most of the world. That’s why we saw so many corporate inversions.
Trump could ask Congress to cut that rate to 15%. Were that to happen, the stock market could see a major rally, as corporations can hold more of their profit, distribute more dividends and hire more people.
The play on reality: For this, you could even consider buying Apple Inc. (NASDAQ:AAPL), which would probably repatriate the $200 billion it holds overseas, and save $40 billion in taxes.
Fear #5: Donald Trump will repeal the Affordable Care Act.
No, he won’t. That also requires Congress.
What we are likely to see is “repeal-and-replace.” However, pre-existing condition exemptions and lifetime maximums are likely to stay because it would be political suicide to eliminate them.
Forcing people to buy insurance will likely be removed, though, meaning people can have real choice.
Hopefully, insurers will be able to compete across state lines, which would mean more volume and more business.
The play on reality: The iShares Dow Jones US Healthcare (ETF) (NYSEARCA:IYH) — which holds equipment companies, pharma stocks and other healthcare plays — seems like the best move here.
Fear #6: Donald Trump will kill alternative energy.
No, he won’t.
Alternative energy will kill itself. It doesn’t work, folks. Solar and wind, if they worked magnificently, would have stormed the nation by now — especially during the past eight years with an administration that was openly hostile to fossil fuels.
Instead, Donald Trump is more likely to remove barriers to oil exploration and production here in the U.S. He may even remove Russian sanctions that permit the Russian co-venture with Exxon Mobil Corporation (NYSE:XOM) to proceed.
The play on reality: Energy independence is a good thing, and that means the Energy SPDR (NYSEARCA:XLE) — an ETF featuring many of the country’s blue-chip energy stocks — might be a good place to invest.
Fear #7: Donald Trump will be a meanie.
Yes, he will be, to those that deserve it.
Trump will push back on the destructive PC culture and put “social justice whiners” in their place. He will show strength to our enemies, and play from a position of strength. He will do what is best for business, because Trump investments depend on the success of America.
Ultimately, Donald Trump will be good for the stock market because he will make America great again.
The play on reality: Buying and holding something like the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) — which is just a bullish call on the U.S. stock market — is a smart long-term play.
Lawrence Meyers is the CEO of PDL Capital, and manager of the forthcoming Liberty Portfolio stock newsletter. As of this writing, he has no position in any stock mentioned. He has 22 years’ experience in the stock market, and has written more than 1,600 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.
