4 Reasons Why So Many Investors Voted for Trump
Written by
Marc Guberti
Edited by
Cory Dudak
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Investors cheered on President-Elect Trump’s victory as stocks soared to record highs. The Nasdaq Composite is up by roughly 7% since the election, while Bitcoin recently crossed $100,000 for the first time.
Trump’s policies have excited investors, and there is a growing belief that the upcoming Trump presidency will greatly benefit the stock market. These are some of the reasons why many investors voted for Trump and brought stocks to all-time highs when the victory became official.
Taxes
Trump’s Presidency ensures the Tax Cuts and Jobs Act will extend beyond 2025, a policy that boosted corporate profits during his first administration. However, Trump has proposed more tax changes during his second term, which can include the elimination of a federal income tax.
Without a federal income tax, consumers would have more money available to put back into the economy. This change would boost corporate profits and reward long-term investors. Furthermore, Trump’s victory prevented candidate Harris from raising corporate tax rates. One of her proposals included raising the corporate tax rate to 28%, which would have hurt corporate profits and consumer spending.
Trump Is Pro-Bitcoin
Few investments have rallied as much as Bitcoin since Trump’s victory, and part of the reason is Trump is bullish on Bitcoin. He believes the United States should establish a strategic Bitcoin reserve, and an official reserve can spark competition from other governments.
Bitcoin is up by more than 40% since Trump’s victory, and it’s likely to rally due to his policies. It also helps that Elon Musk is in charge of the Department of Government Efficiency. He has also expressed enthusiasm for cryptocurrencies and accepted Bitcoin as a payment method for Tesla vehicles.
While other investors have been happy about Trump’s victory, few of them are as happy as the crypto bulls.
Reduced Federal Spending
Trump has promised to target federal spending and minimize the amount of wasted taxpayer dollars. This promise isn’t just good for Americans, but great news for investors.
Reducing federal spending will help get national debt under control, and it can keep interest rates low. That’s because reduced spending will lower the demand for borrowed money. Companies aren’t going to fill the government’s shoes, and the end result will be lower interest rates.
Lower interest rates allow corporations to borrow more money and expand operations. Those rates also help real estate investors, as properties can appreciate quicker. Higher property prices will help landlords raise their rents. Consumers may be able to keep up with those higher rent payments if federal income taxes are reduced or eliminated.
Deregulation
President-Elect Trump is going to deregulate several industries when he returns to the White House, and few will benefit as much as oil. “Drill, baby, drill” will increase U.S. oil production, which will lower the cost to ship products and services. Lower oil prices can keep inflation in check as the Trump administration addresses excessive government spending.
Deregulation can increase production and innovation. Cutting back on regulations can also increase jobs, which would increase consumer spending. These developments can boost corporate revenue and profits, resulting in enticing long-term returns.
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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