Cabot’s Crista Huff on Elections and Economics

Investors are presented with two very different economic scenarios this November through the candidacies of Hillary Clinton and Donald Trump, asserts Crista Huff, chief analyst of Cabot Undervalued Stocks Advisor.

How will their policies affect investors? As a caveat, note that I am a Republican and a trade lobbyist in addition to my role as chief analyst of Cabot Undervalued Stock Advisor.

On the Democratic side, it is fair to assume that a Clinton presidency would bring similar policies to that of President Obama, including increasing national debt, increasing trade deficits and additional legislative monstrosities, such as the TPP trade agreement.

I would also expect increasing government regulation, which translates directly to increased costs for businesses. Thus, I would expect continued increases in business closures, with higher concentration in the energy, healthcare and banking industries.

With Donald Trump, the big talking points are about the economy, fair trade, immigration and “everything else”.

When I say “everything else”, the man sends so many conflicting messages that the best any of us could do is guess where he stands. I will avoid putting policies in his mouth and then speculating how they will affect America.

I do believe that a Trump presidency would open the door to Congressional efforts to simplify and repeal onerous and costly legislation such as Dodd-Frank.

The businesses that are more likely to benefit from the unwinding of Dodd-Frank — a process that has already been well planned out within the House Finance Committee — are the same ones that are being strangled by it today: financial companies.

Under a Trump presidency, I’d invest in undervalued financial stocks. There are many other banks, mutual fund companies and brokerage firms that look appealing from the perspective of an investor who prefers undervalued growth stocks.

Today, Goldman Sachs (GS) would be my top pick. The bank dramatically outranks its competitors on earnings growth and valuation; it’s the clear choice among bank stocks in 2016.


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