19 Feb How should I rebalance my portfolio with Trump in office?

Q. I’m thinking about my investments for retirement and what the new president will mean for it. As I rebalance my portfolio, how should I consider the policies he is promising for the investments I choose to make?
— Investor

A. Every time there’s a presidential election, the stock market takes notice.

And you’re right, we have seen some strong reactions from investors as the new administration takes hold.

Now that the uncertainty of the presidential election has passed, the markets will focus on fundamentals of corporate profits, the economy, and the impact of enacted policies, such as tariffs, taxes and regulatory changes, said Gerard Papetti, a certified financial planner and certified public accountant with U.S. Financial Services in Fairfield.

He said 2025 is off to a good start, with January posting positive returns for U.S. as well as international equities.

Although not solely related to the new president and his policies, Papetti said, there are several issues to consider for investments.

Economic and Market Tailwinds:
Ø A neutral stance with potential for further interest rate cuts by the Federal Reserve should favor Corporate and Government Bonds
Ø Lower tax rates may power higher earnings growth for U.S.-based companies.
Ø Broader equity opportunities may exist in undervalued U.S. Large Cap Value stocks, Mid Cap and Small Cap stocks.
Ø Artificial intelligence momentum may continue in 2025 but concerns over related company stock valuations present challenges.
Ø The utilities sector should be considered as a potential beneficiary of the energy needed for Artificial Intelligence and related energy demand.
Ø Gold, Silver, and Commodities may be considered as a hedge against a potential rise in inflation and debt sustainability.

Economic and Market Headwinds:
Ø US Large Cap stock valuations are higher than historical metrics.
Ø 2024 leading S & P 500 sectors were technology and communication services . . . a repeat of 2023’s leading sectors. Is a “three-peat” possible?
Ø The impact of tariffs and their influence on inflation and economic activity may add to market volatility and potential corrections in overvalued sectors.
Ø Higher market interest rates may persist longer than anticipated as inflation remains stubbornly higher than the Federal Reserve’s 2.0% target. Higher interest rates make it more expensive for companies and individuals to borrow to pay for new investments and/or spending.
Ø Geopolitical risk uncertainty; Ukraine, Middle East, China

All these things considered, your portfolio should have a long view that takes into account your time horizon, your goals and how much risk you are willing to take. If you’re unsure of how to invest with those items in mind, we recommend you meet with a financial advisor who can help.

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This story was originally published in February 2025.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.