Welcome to my latest video presentation. The article below is a condensed transcript; my video contains additional details and several charts.

Your emails help me calibrate editorial coverage to your real-world needs. Readers have all sorts of ingenious ways to reach me, including the use of social media. I applaud your tenacity. I prefer getting your inquiries via our official address for letters to the editor: mailbag@investingdaily.com. I try to answer all emails in a timely fashion.

Let’s dive into the figurative “mailbag” to see what’s on your minds; I’ve cherrypicked the emails that are most indicative of reader concerns and sentiment.

Not surprisingly, the latest batch of emails expressed anxiety about the turbulent state of American politics, in the wake of Donald Trump’s surprise re-election. How will political battles under Trump’s second term affect investors?

I chose the most representative questions; they’re in bold. My answers strive for concision and universal applicability.

“Which sectors are most likely to benefit from Trump’s policies in 2025? And isn’t it risky to predicate investment decisions on politics, especially when public policy is so fluid?” — William T.

Historically, Trump’s policies have emphasized deregulation, tax cuts, and infrastructure spending. Sectors like energy (particularly fossil fuels), defense, and construction often thrive under such conditions. Trump also has taken a crypto-friendly approach which already has sparked a rally in crypto investments.

Bitcoin (BTC), the grandfather of cryptocurrency that’s largely considered the benchmark for the asset, has soared in the wake of Trump’s re-election…it has “gone to the moon” in the parlance of crypto enthusiasts. This bull market in crypto has lasting momentum (see my video for charts).

But you’re right to highlight a caveat: Betting exclusively on policy-driven trends is risky. Policies can face implementation delays, legal challenges, or reversals depending on political dynamics.

A balanced approach—investing in sectors with strong underlying fundamentals alongside those aligned with anticipated policies—helps mitigate such risks.

“Isn’t it wise to invest based on Trump’s proposed tax cuts and trade initiatives?” — Jack S.

While it’s tempting to chase investments tied to policy promises, history shows that political outcomes are uncertain and often overestimated by the market. For instance, while tax cuts may boost corporate earnings, trade wars can introduce volatility and harm growth.

Also keep in mind, in the new year, the Republicans will control the U.S. House of Representatives with only a razor-thin majority.

Successful investing hinges on understanding company fundamentals and broader macroeconomic trends. Politics may shape the environment, but solid businesses adapt to challenges regardless of policy shifts.

“Could the Federal Reserve pause rate cuts in 2025 if inflation fears resurface due to Trump’s tax cuts?” — Sally H.

It’s possible. Aggressive fiscal policies like tax cuts can stimulate the economy but also reignite inflationary pressures. If inflation climbs and unemployment stays low, the Fed might reconsider its dovish stance to maintain price stability, although I think interest rates will continue to come down in 2025.

According to the latest jobs report released December 6 by the U.S. Bureau of Labor Statistics, the U.S. economy added 227,000 jobs in November, a sharp rebound after the previous month’s total was weighed down by hurricanes and the strike by Boeing’s (NYSE: BA) machinists.

Friday’s number beat a consensus forecast of 200,000. The unemployment rate rose 0.1 percentage point to 4.2%. The jobs report is one of the final big data releases before the Fed’s December 17-18 meeting, at which it will decide whether to initiate a third consecutive interest rate cut.

Although Friday’s jobs performance surpassed projections, it wasn’t sufficiently robust to undermine the case for a final rate cut this year. The jobs market is strong, but it’s neither too hot nor too cold, representing the “Goldilocks” scenario that the Fed likes to see.

That said, investors should watch for mixed signals—such as rising Treasury yields or hawkish Fed commentary—that could hint at a potential pause or even rate hikes. Stay flexible and diversify across asset classes to navigate such scenarios.

“How can I hedge my portfolio against the political and policy uncertainty expected in 2025?” — Kevin B.

Diversification remains your best defense against volatility. Consider a mix of equities, bonds, and alternative assets like commodities or real estate. Adding exposure to sectors historically less sensitive to economic cycles, such as health care and utilities, can provide stability.

Additionally, exchange-traded funds (ETFs) designed to track market volatility (like the VIX) or investments in gold and inflation-protected securities (TIPS) can serve as hedges. Above all, avoid knee-jerk reactions to headlines; focus on your long-term investment goals.

“What’s the best way to profit from volatility during Trump’s second term?” — Tom K.

Volatility can be an opportunity for disciplined investors. If you’re comfortable with risk, consider using options strategies like covered calls or protective puts.

For a more conservative approach, focus on dividend-paying stocks with a history of resilience in volatile markets.

Dividends have played a pivotal role in the growth of the S&P 500. Across 90 years, dividends accounted for approximately 40% of the market’s total gains. This historical perspective highlights a crucial truth: ignoring dividends means leaving a significant portion of potential returns on the table.

Funds that track market swings, such as low-volatility ETFs, can also be effective. The key is to remain proactive and not let short-term turbulence derail your overall strategy.

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John Persinos is the editorial director of Investing Daily.

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