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Trump vs. Biden: Who Is Better for Your Investment Portfolio?

You’ll want to consider how you diversify your portfolio amid changing administrations.

By Adam Palasciano

Edited by Eric McWhinnie

Updated May 28, 2024

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Have you ever wondered how the White House affects your ability to build wealth? Recent presidents like Donald Trump and Joe Biden have taken vastly different approaches, so it's natural to be curious.

We'll explore how these policies might influence the overall stock market, specific industries, and, ultimately, the decisions you make about your investments.

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How did stocks perform under Donald Trump?

The stock market under the Trump administration saw some impressive gains. Stocks reached new heights with a surge of 63% in the S&P; 500 index over his tenure.

For reference, the S&P; 500 gained 27% under Jimmy Carter and 47.5% under George H.W. Bush (both one-term presidents). Under Barack Obama’s two terms, the S&P; 500 jumped 175.9%.

In contrast, the advent of the Biden presidency introduced a phase characterized by nuanced and mixed performance, where market dynamics shifted with policy changes and some economic challenges.

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How have stocks performed under Joe Biden?

Biden's far-reaching policies in infrastructure, clean energy, and health care promise to invigorate specific sectors such as renewable energy and technology with newfound resilience.

Under the Biden administration, the benchmark S&P; 500 generated impressive returns of 27% in 2021 and 24% in 2023. The S&P; 500 fell 19% in 2022.

Investors need to adopt a strategic approach to portfolio management to navigate the market changes that result from changing political administrations and ongoing economic dynamics.

What to consider if Joe Biden is reelected

In the hypothetical scenario of Biden securing a second term, investors should expect the status quo in several policy areas, such as climate change, infrastructure, and renewable energy.

However, investors must remain aware of potential shifts in regulatory frameworks and tax policies that could potentially alter market dynamics.

Diversification and a focus on companies exhibiting resilient business models emerge as crucial strategies to mitigate risks associated with policy changes.

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What to consider if Donald Trump is reelected

In the eventuality of Donald Trump securing a second term in office, investors anticipate a continuation of his pro-growth policies and emphasis on economic stimulus. Sectors like oil and gas could gain renewed attention and investment, fueling prospects of growth.

Nevertheless, geopolitical tensions and trade disputes are changing the market, potentially introducing volatility and underscoring the importance of maintaining a balanced and diversified portfolio.

No matter who wins, never bet against America

Legendary investor Warren Buffett strongly believes in never betting against America. Regardless of the prevailing political climate or leadership changes, the resilience and innovation inherent in the American economy will endure.

Buffett's unwavering confidence in U.S.-based assets serves as a beacon of wisdom, advocating for patience, diversification, and a strong focus on fundamental value amid changes. No matter who's in the White House, America is a great place to build wealth.

Bottom line

A long-term perspective and sound investment principles are your strongest allies in the face of any major change. Market gyrations are inevitable, but disciplined diversification can act as a shield.

By staying informed and resolute, you can prepare yourself financially to weather any storm, political or otherwise.

More from FinanceBuzz:

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