Trump fans are already smiling. The prez-elect is months away from taking the oath, and yet he’s already put money in the pockets of American investors. A huge slug of stocks surged last week.

[ad#Google Adsense 336×280-IA]There’s no doubt the billionaire will run the nation with the economy in mind.

Tax breaks… enhanced fiscal policy… and deregulation will be hot topics over the coming four years.

And there’s also little doubt the country will soon begin to reminisce about one of the greats of governing with the economy in mind… Ronald Reagan.

The comparisons between our 40th and 45th presidents will soon be rampant.

In our special [recent] issue, Alexander Green detailed the sectors to watch and the policies that will move them. Many of them are already surging.

It’s clear that the market expects Trump to deliver on his promise of big change. That change will look a lot like what Reagan offered the nation some 30 years ago.

To be sure, Reagan and Trump have plenty of similarities. They’re both…

  • Washington outsiders
  • Divorcés
  • TV personalities
  • Low-odds winners
  • Proponents of limited government
  • Known for their promises to “make America great again.”

But the comparisons don’t stop there. When it comes to economic policy, Reagan built his legacy on four pillars – supply-side economics, lower income taxes, slashing regulation and beating inflation.

To be clear, Trump has no worries of runaway inflation taking hold anytime soon. That said, the morale at Club Feb is likely quite low these days. Its days of pulling so many levers and jiggering with the economy are likely done.

Instead, President Trump will focus on fiscal stimulus… not monetary wizardry.

It’s the idea of supply-side economics (or trickle-down economics) and reduced regulation that truly has Wall Street drooling. If Trump is able to enact the Reagan-esque policies he’s teased, investors are in for a fun ride.

Under the movie star’s eight-year tenure, stocks averaged an annual gain of more than 14%… surging a total of 117%.

Reaganites consider dropping the top personal income tax rate from 70% to 28% and a 13% cut in the corporate tax rate the catalysts that drove the nation out of the worst recession since the Great Depression.

But they also tend to overlook the whopping increase in spending that more than doubled the country’s national debt – likely another hallmark of the soon-to-be Trump administration.

There’s no doubt these ideas will have the nation soon admiring the beauty of the Laffer Curve once again.

Overlooked for the last eight years, this proven economic model tells us that every tax dollar that’s put back into the pockets of those who earned them will have a multiplying effect on the economy.

In other words, a dollar saved is more than a dollar earned.

The theory gives us a hint at the stocks that will have the most success over the next four years. Already, we’ve seen stocks that will benefit from increased government spending and a decreased regulation surge. The next wave of profits, however, will come from those that benefit the most from more favorable tax policies.

For example, we can’t help but look at that huge pile of dollars sitting overseas waiting to be repatriated. Companies have allowed their cash stockpiles to grow moldy and dusty as they wait for an opportunity to bring them home without losing a third or more to Uncle Sam.

They may soon get their chance. When they do, the value of their stock will rise… if not flat-out soar.

The bottom line is that, under Reagan, the economy embarked on a 20-year run where 5% growth was common. It’s not something the U.S has seen much of since.

If Trump can follow similar strategies to find similar success, investors don’t have much to worry about.

Good investing,

Andrew

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Source: Investment U