How to Invest Under Biden

Written by Ryan Stancil
Posted November 11, 2020

For better or worse, the decision of the people in Washington, D.C. affects every last one of us. People can post about it in all caps on Facebook. They can hold up signs on the side of the road. They yell at their TVs over it all they want. That doesn’t change the reality of the situation. 

Likewise, the reality is that we’ll be seeing a changing of the guard in D.C. in January. And like any time administrations change, priorities change. Under Trump’s presidency, the defense and aerospace industries soared. Corporate tax reductions bought many a new luxury car for C-suite executives at the big banks. Relaxed environmental regulations made it possible for oil and mining companies to thrive. 

If you had shares in companies in any of these sectors, you’ve likely done very well over the past four years. 

So what about the next four years?

President-Elect Biden is no doubt building out his cabinet so he can get right to work come January. With his term on the horizon, it pays to look at just what his policies are. That will determine how his potential cabinet appointees will lead their agencies and how policy will affect investment. 

Biden’s Potential Cabinet

It’s worth looking at how the next defense secretary might operate under this new administration first and foremost. According to Biden’s website, his aim in foreign policy is to repair our reputation with our allies. He wants America to be a leader again and “mobilize global action on global threats.” 

This could be seen as code for strengthening alliances against rival countries like China and Russia. That would mean more work for defense companies. In essence, not much will likely change for firms like Lockheed Martin and Northrop Grumman. The industry is too embedded in the economies of too many states for democrats in congress to fight Biden’s policies too hard. So those companies will likely continue thriving under his leadership. 

Treasury secretary is a big post being watched closely. Trump touted tax cuts that largely favored the wealthy. It’s believed that Biden’s approach will look to do more for the everyday American while remaining somewhat moderate. His appointment to the position might then push for policy changes that bring tax cuts to the middle class while increasing taxes on the wealthy and corporations. This is all a guess at this point, but investments in financial institutions may need to be reexamined under a Biden presidency. Still, if that scenario plays out, the benefit to the middle class could be a good thing for other industries. There’s no saying for sure what those would be right now, but those areas will become more apparent as time goes on. 

Secretary of energy is perhaps the biggest of the big appointments that will impact its respective industries. Trump’s policies largely favored fossil fuels. Biden’s policies will focus more on renewables. Biden wants to put the country on an “irreversible path to achieve net-zero emissions, economy-wide, by no later than 2050.” This means big shifts in the fuel we use to power our vehicles and our homes. It means a big shift in how power companies make their money and the sources of power they provide. It means a massive shift in how the industry is regulated. 

Energy is among the more noteworthy areas where progressive policy could gain ground as far as cabinet picks go. If that happens, then you can expect to see renewable energy investments take off under the new administration. That could mean batteries, nuclear, hydrogen, and anything else that will help mitigate the ongoing climate change crisis. 

At the risk of this getting too long, it’s worth giving the health care sector a few words. With Biden taking office right in the grips of a global health crisis, managing that will be one of his top priorities. His pick for secretary of health and human services will have his or her work cut out for them. To start, Biden wants to put in place policies that will centralize federal leadership in managing and ultimately beating COVID-19. While that largely affects government agencies first, it also affects companies that make protective equipment and will ultimately make and distribute treatments and vaccines. 

In short, the health care sector might see a boost before anyone else during Biden’s term. The urgency of the situation makes it likely that short-term health care investment might provide a decent return. 

Where It Will All Lead

The political machine is vast and complex, and the areas above are just the surface-level stuff. Once Joe Biden gets his administration established, policy rollout will affect just about every area you can think of. 

Of course, we here at Outsider Club will be watching closely and updating our readers accordingly. There’s money to be made no matter who the president is. It’s just a matter of knowing where to look and when to act. 

Keep your eyes open,

Ryan Stancil
Contributing Editor, Outsider Club

Ryan is an associate editor and regular contributor to Outsider Club. Since 2014, his articles have offered commentary on technology and geopolitics to help readers make sense of the constantly changing landscape and how it affects their investments.

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