As the 2024 U.S. presidential election draws closer, many investors are concerned about the potential impact of political outcomes on financial markets. Regardless of which party wins, the election brings a level of uncertainty that can affect everything from market volatility to long-term economic policies. At WHVP, we understand how unsettling this can be, especially for those working hard to preserve their wealth. From our unique vantage point in Zurich, Switzerland, we offer U.S. clients a neutral outside perspective on managing their wealth in an ever-changing political and economic landscape.

In this article, we’ll explore how different election outcomes could impact key sectors, outline potential risks and opportunities, and demonstrate how a well-diversified, globally focused investment strategy can help safeguard your wealth no matter who wins the presidency. The article is a very brief summary of our extensive report "Election-Proof Your Portfolio". You can download the whole report for free by clicking on the link.

How Political Outcomes Can Influence Financial Markets

The 2024 U.S. election presents two potential paths for the country’s economic policies, depending on whether a Democratic or Republican administration takes the lead. Both scenarios come with their own set of implications for financial markets and specific sectors of the economy.

A Democratic win, with Kamala Harris at the helm, could see a focus on progressive policies, including higher corporate taxes, expanded government spending on social programs and infrastructure, and increased regulation in areas like clean energy and healthcare. These policies may create short-term market volatility as businesses adjust to new tax structures and regulatory requirements, particularly in heavily regulated sectors like energy and healthcare. At the same time, sectors aligned with government priorities—such as renewable energy and healthcare—may present opportunities for growth.

In contrast, a Republican victory is expected to prioritize lower taxes, deregulation, and pro-business policies. Historically, Republicans favor policies that reduce corporate tax rates and lessen restrictions on industries such as energy, finance, and defense. While this might create a more favorable environment for businesses, it also carries the risk of market volatility due to reduced oversight and potential trade tensions with key international partners. A Republican administration could also scale back support for environmental regulations, potentially slowing growth in the renewable energy sector.

Both election outcomes introduce different opportunities and risks for investors. However, the most important factor to keep in mind is that political outcomes—though impactful in the short term—are only one piece of the wealth preservation puzzle. Over the long term, economic realities like inflation and U.S. dollar devaluation are larger, more persistent concerns, which is why a globally diversified portfolio is essential for weathering political and economic change.

Rising Inflation and Dollar Devaluation: Persistent Threats to Wealth

No matter the election outcome, the U.S. faces ongoing economic challenges, including rising inflation and the steady devaluation of the dollar. Over the past two decades, the U.S. dollar has lost significant value against a basket of international currencies, which has eroded purchasing power for those holding assets primarily in U.S. dollars.

Inflation, which reduces the value of money over time, is a growing concern as government spending continues to increase. Whether through infrastructure projects, social services, or defense spending, large-scale federal investments could drive inflationary pressures, particularly if accompanied by higher interest rates. Inflation not only eats away at returns on traditional investments, but it also increases the cost of goods and services, further weakening the purchasing power of dollar-denominated assets.

In this environment, investors need to think about long-term strategies to preserve their wealth. One of the most effective ways to protect against inflation and currency devaluation is by diversifying globally. This means spreading investments across different countries and currencies to reduce exposure to U.S.-specific risks. For American investors, Switzerland provides an attractive option. The Swiss economy is known for its stability, and the Swiss franc is a strong currency that has held its value against the dollar over time.

Global Diversification: A Shield Against Political and Economic Risks

Diversifying your portfolio globally is not just a response to political uncertainty; it’s a proactive strategy for preserving wealth in a world where economic and political landscapes are increasingly interconnected. By investing internationally, particularly in stable economies like Switzerland, you can mitigate risks related to domestic market volatility and dollar depreciation.

At WHVP, we provide U.S. investors with an impartial, independent perspective from outside the U.S. political arena. Our position in Zurich allows us to remain free from the direct influence of American political shifts, offering our clients a more objective viewpoint when it comes to safeguarding their wealth.

A globally diversified portfolio can help buffer against U.S. economic challenges, such as rising inflation or market volatility caused by political events. Instead of relying solely on U.S.-based investments, a well-rounded portfolio might include foreign currencies, international stocks, and precious metals. This kind of diversification can provide stability in uncertain times and protect against the erosion of purchasing power caused by inflation and currency devaluation.

Strategic Opportunities and Risks Under a Democratic Administration

If Kamala Harris leads a Democratic administration following the 2024 election, the likely economic approach would focus on progressive policies.

These could include:

• Increased Corporate Taxes: Higher taxes on businesses could lead to market volatility as companies adjust to new tax structures, potentially reducing profitability for U.S.-based corporations.
• Government Spending on Clean Energy and Healthcare: Sectors like renewable energy and healthcare are expected to receive significant investment through federal funding. This creates growth opportunities in industries related to solar, wind, and electric vehicles, as well as healthcare services and pharmaceuticals.
• Infrastructure Development: Construction companies, real estate developers, and suppliers of building materials could benefit from government-led initiatives to improve public infrastructure, including roads, bridges, and housing projects.

While these opportunities exist, a Democratic administration also introduces certain risks that investors should be aware of:

• Market Volatility from Tax Hikes: Higher corporate taxes and potential increases in personal income taxes for high earners could result in market corrections. Companies may reduce dividends or scale back expansion plans, which could negatively impact stock prices.
• Inflation from Increased Government Spending: As government spending rises, particularly on large-scale infrastructure and social programs, there is a risk of inflationary pressures intensifying. This could lead to higher consumer prices and lower returns on traditional investments.
• Regulatory Risks for Traditional Energy Sectors: A Democratic administration is likely to increase regulation on fossil fuel industries, including oil and gas. This could hurt profitability in these sectors, especially for companies that rely on fracking and coal production.

What a Republican Administration Could Mean for Investors

A Republican victory in 2024 would present a different economic approach, focused on deregulation, lower taxes, and support for traditional industries like energy and defense.

Key areas of opportunity for investors might include:

• Energy Sector: Republican policies often favor energy independence and reduced regulation on fossil fuels, benefiting companies involved in oil, gas, and coal extraction. Firms involved in infrastructure projects like pipelines may see renewed growth under a Republican-led government.
• Financial Sector: A Republican administration is likely to reduce oversight on financial institutions, which could create a more favorable business environment for banks and asset management firms. This deregulation may result in increased lending, higher profits, and opportunities for growth in investment banking.
• Lower Corporate Taxes: If corporate taxes are reduced, U.S.-based companies could see higher profits, which would benefit shareholders through increased dividends and stock buybacks. Small and mid-sized businesses, in particular, could benefit from lower tax burdens, allowing for reinvestment in growth and innovation.

While these pro-business policies may present opportunities, there are also risks associated with a Republican-led government:

• Market Volatility from Deregulation: Although reduced regulation may boost short-term profits, it can also lead to instability in sectors like energy and finance, where risks may not be as closely monitored. This could result in greater market volatility over time.
• Trade Tensions: A Republican administration might adopt a protectionist approach to international trade, which could lead to tensions with key trading partners like China and Europe. Increased tariffs or trade wars could negatively impact U.S. exporters and disrupt global supply chains.
• Environmental Setbacks: A shift away from renewable energy investments could slow growth in this sector, particularly for companies that have benefited from government subsidies and tax incentives under previous administrations.

Final Thoughts

As the 2024 U.S. election draws near, it’s understandable that many investors feel uncertain about how the results may impact their portfolios. However, while political outcomes can create short-term volatility, the key to long-term wealth preservation lies in a diversified, resilient investment strategy. By looking beyond domestic markets and incorporating global assets into your portfolio, you can protect your wealth from both political and economic uncertainty.

At WHVP, we offer U.S. clients the benefits of our Swiss expertise and independence, helping you navigate the complexities of political change with confidence. By focusing on global diversification and long-term stability, we ensure that your assets remain protected, no matter which political party takes office. If you would like to discuss your financial situation with us, complete the form below for a complimentary consultation: