The investment world, at least for US stocks, has shown economic jubilation at the prospect for a Trump administration and Republican congress putting forth their business-friendly, lower tax, less-regulated economy.  The markets had one of their best post-election periods in history. If this lasts through his second term as president, then maybe just load up on stocks and enjoy the ride.  However, all of this potential growth, while likely great for these companies, come with some potential unforeseen risks that could affect how you invest and your financial goals. At Glassman Wealth, we take our responsibility to assess these shifts seriously. With over $2 billion under management, we’re committed to providing thoughtful insights and preparations for the economic changes that may arise from new policies. Here’s a look at the policies we’re monitoring, the potential impacts to your portfolios, and what you may consider doing. Tariffs and Trade: The Double-Edged Approach Trump’s aggressive use of tariffs is intended to strengthen American industry by making imported goods more expensive, potentially boosting domestic production. While this could help U.S. manufacturers, it also raises potential complications. Many sectors depend on imported parts and materials, and increased tariffs could disrupt supply chains and elevate production costs. It’s still uncertain whether Trump’s tariffs will target specific nations or industries, or if they’ll be more broadly applied—a distinction that will significantly impact the economy As we saw in the first days of post-election trading, the US dollar jumped compared to most foreign currencies.  Because foreign companies convert sales in dollars, a rise in the US dollar helps to offset the tariffs Trump hopes to use to penalize these companies. Glassman Insight: Many small companies may benefit from less regulation and a faster growing economy but be less impacted by global tariffs.  Evaluate your small company exposure within your portfolio and consider adding to it.  At Glassman Wealth, we prefer active management vs. indexing as in the most common index funds, very few of these small companies are actually profitable. Extended Tax Cuts: Short-Term Gains with Long-Term Implications Beyond corporate tax reductions, Trump’s tax agenda includes extending the 2017 personal tax cuts, currently set to expire after 2025, and expanding additional relief measures like cuts on tip income, overtime pay, and small business deductions. While these cuts could promote spending and investment, they raise concerns about the federal deficit. Increased economic growth could result in rising inflation, which may push interest rates upward, potentially counteracting some of the benefits of tax relief. Glassman Insight: While we continue to use index funds that track the S&P 500, we’re also focusing on companies with solid fundamentals—including steady revenue growth, cash flow, and dividends.  Look beyond typical index funds and do some added research on “fundamental indexing.” Bonds and Rates: Seeking Balance Amid Rising Interest Rates Trump’s focus on economic growth through tax cuts and infrastructure spending may lead to increased inflation and higher interest rates. For investors holding long-duration bonds like Treasuries, this environment may present challenges, as rising rates typically reduce bond prices.  That certainly played out in the first days following the election. However, as corporate bonds stand to benefit from an expanding economy, shorter-duration bonds could help mitigate interest rate risk due to their reduced sensitivity to rate changes. Glassman Insight: We continue to favor short-term, high-yield bonds—an often-underutilized asset class. These bonds come with higher risk due to their lower credit quality, but shorter maturities help reduce sensitivity to rate fluctuations. Energy Independence: Unanticipated Challenges for Oil and Gas Trump’s “energy independence” agenda promotes deregulation and increased drilling, which on the surface appears favorable for energy companies. Yet, an oversupply of oil and gas could depress prices, undermining the profitability of the very companies poised to benefit.  Once again, the first days after the election saw oil prices drop. Though Trump’s policies could help lower energy prices and therefore inflation, energy’s share of the Consumer Price Index is relatively small, limiting its broader deflationary impact. Additionally, Trump may use the prospect of lower oil prices to harm the economies of oil-rich adversarial nations, aligning with his geopolitical aims. Glassman Insight: While energy stocks performed exceptionally well during Biden’s term, high valuations may suggest that the “obvious” trade of investing in energy companies under Trump is not as straightforward as it seems. We are approaching this sector with caution. Avoiding Common Pitfalls: When Biases Meet Market Realities It’s tempting to assume certain industries will thrive under a particular administration, but markets often defy expectations. Many expected energy stocks to flourish during Trump’s first term, yet they underperformed. Conversely, energy stocks surged under Biden, despite anticipated challenges. See our piece on The Worst Possible Political Trade: When The Obvious Bet Backfires  Glassman Insight: Beyond Trump’s high-profile policies on tariffs, tax cuts, and deregulation lies their potential impact on macroeconomic forces that drive the market. Lower taxes, reduced regulation, and continued federal spending could lead to larger deficits and ongoing inflation concerns. Rising inflation and interest rates may strengthen the dollar, impacting sectors like oil and travel, while higher costs for American exports could slow international demand. In this environment, small companies may benefit from lower taxes and lighter regulation, while retirees may find appealing yields in higher-rate investments. Prepare for the evolving financial landscape with Glassman Wealth’s exclusive 2025 Investment Outlook Webinar on Tuesday, November 19 at 12pm ET. In a world of lower taxes, rising interest rates, and heightened inflation, understanding the macroeconomic shifts behind the headlines is crucial. Join Barry Glassman and our research team as we dive into how projected 2025 policies and broader economic forces could impact your portfolio, retirement income, and financial goals. Don’t miss this chance to strengthen your financial strategy—register now. Important Disclosure Information Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Glassman Wealth Services, LLC) or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Neither Glassman’s investment adviser registration status, nor any amount of prior experience, success, or level of assets under management, should be construed that a certain level of results or satisfaction will be achieved if Glassman is engaged, or continues to be engaged, to provide investment advisory services. The post Navigating the Trump Presidency: Opportunities and Hidden Risks for Investors first appeared on Washingtonian.