One strategy for investing involves the President of the United States. Investors and analysts try to predict which companies and sectors will benefit the most from the anticipated policies of the Commander-in-Chief.
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At the same time, some investors find value in trying to avoid investments that may not pay off with a certain person in the White House.
“I’ve managed portfolios through multiple presidencies, and I’m seeing a lot of investors make the same mistakes they made during Trump’s first term,” said Andrew Lokenauth, a money expert from Be Fluent in Finance. “Based on my experience, here are the key investments to avoid.”
Sector-Specific ETFs
According to Lokenauth, sector-specific ETFs based on campaign promises are a huge trap.
“During Trump’s first term, I watched countless investors pile into energy ETFs thinking his pro-drilling stance would send oil stocks soaring,” Lokenauth said. “Boy were they wrong — energy stocks stayed flat despite all the ‘drill, baby, drill’ rhetoric.”
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Defense Stocks
Defense stocks are another one on the list of those to avoid for Lokenauth.
“Sure, Trump talks tough on military spending, but I’ve noticed these stocks tend to perform better under Democratic presidents — counterintuitive, right? Plus, the massive defense budget is already priced in,” Lokenauth said.
Chinese Stocks
Per Lokenauth, Chinese tech stocks are particularly risky right now.
“From my portfolio experience, the trade war rhetoric plus tech restrictions create too much uncertainty,” he said. “I lost about 15% on some Chinese holdings during Trump’s first term before I wisened up and sold.”
Environmental, Social and Governmental (ESG) Funds
“Environmental, Social and Governmental (ESG) funds are also problematic,” according to Lokenauth. “While I personally support sustainable investing, Trump’s anti-regulatory stance could gut environmental protections and create headwinds for clean energy companies. The sector dropped roughly 20% in his first year last time.”
While Lokenauth said there are some types of investments to avoid while Trump is in office, he added a warning about making big investment shifts.
“And here’s something most advisors won’t tell you: Avoid making any major portfolio shifts based on presidential policies,” Lokenauth said. “I’ve learned this lesson the hard way. The market cares way more about interest rates and corporate earnings than whoever’s in the White House.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: Expert: 4 Types of Investments To Avoid While Trump Is in Office
