The watchword for economists is balance and diversification. The view of the economic scenario will change dramatically as Joe Biden’s victory will bring opposite changes to Trump’s economic policy.
If Trump promised a tax cut for companies with obvious benefits for large stocks, Biden would appear to be following a strategy focused on citizen welfare, especially for the less well off. In fact, his program focuses on an increase in taxes on businesses, capital gains and higher incomes “, on the strengthening of Obamacare and on investments in the green economy, with a reduction, instead, of the tax burden for the working class.
This prospect will have repercussions on equity markets with impacting effects not only for the short term.
For investors, which assets should they focus on?
Given that in cases of uncertainty it is always prudent to balance very risky assets with less risky ones, it will therefore be appropriate to turn to cyclical sectors, those linked to the green economy and big tech, to the shares of some emerging markets, to credit, bonds, high yield and safe haven currencies.
We must not overlook the fact that we could be faced with a “possible ‘K’ rebound that will see only a part of the companies grow, while others will have to deal with a longer recession”.
Source: Milano Finanza- Advisor