Can Donald Trump make your stock portfolio great again?

Tim Mullaney, special to CNBC.com
Making the stock market great again?
Republican presidential candidate Donald Trump
Jabin Botsford | The Washington Post | Getty Images

What would President Donald Trump mean for the stock market? Commentators have been trying to puzzle this out, in efforts ranging from the serious to the playfully silly.

Mitt Romney and Hewlett-Packard Enterprise CEO Meg Whitman think Trump could sink the economy, while "Shark Tank" judge and chairman of O'Leary Funds, Kevin O'Leary, thinks stocks would soar in a Trump presidency.

Between all of The Donald's endless exegeses of poll numbers, he has put a lot of big proposals on the table that voters and investors can assess. Here are some basic conclusions about the sectors of the market that would be most in play if Mr. Trump goes to Washington.

By Tim Mullaney, special to CNBC.com
Posted 10 March 2016

Luxury living
This 1,111-carat diamond was found in a mine in Botswana.
Source: Lucara Diamond

A tax cut like Trump has proposed, aimed at higher-income voters, would put money in rich folks' pockets. And they'll spend a lot of it.

That means luxury goods, art and real estate. Think names like Sotheby's or maybe Realogy, which franchises Sotheby's International Realty. Tiffany & Co. fits. Or maybe time to buy that 1,111-carat diamond, the world's second largest (pictured here). The top 10 most heavily-weighted names in the S&P Global Luxury Index include Nike, LVMH Moet Vuitton and car makers Daimler and BMW, as well as North Face parent VF Corp.

George W. Bush cut taxes on the rich, too, and luxury stocks rose, especially in his second term, but crashed in 2008. The luxury index has tripled since 2009.

There are two ETFs tracking the S&P Global Luxury Index, but both are traded in Paris. Though economists say the middle class won't benefit as much, the best bet for U.S. investors may be consumer discretionary ETFs, including the Consumer Discretionary Select Sector SPDR (XLY) and Vanguard Consumer Discretionary (VCR). There is also the "most Trump-esque", in a sense, of all the consumer discretionary ETFs, the Market Vectors Gaming ETF (BJK), focused on the casino industry.

Obamacare surgery
Supporters of the Affordable Care Act celebrate as the opinion for health care is reported outside the Supreme Court in Washington, June 25, 2015.
Joshua Roberts | Reuters

Despite conservative concerns that Trump was wobbly on repealing the Affordable Care Act, his health-care plan would ramp back government support for health insurance, probably hurting hospital companies like HCA, insurers like Molina Healthcare (a Medicaid specialist) and even drug makers, like Gilead Sciences.

Trump's plan would convert Medicaid, which the ACA expanded by 10.8 million people last year, into a block-grant program that would limit growth in spending, if not cut it outright. He would also allow reimportation of prescription drugs, which would undercut prices of more expensive drugs, like Hepatitis C treatments from Gilead, AbbVie and Merck.

Health-care profits and stocks were major ACA beneficiaries. They could be hurt by Trump's plan. So ETFs in the crossfire include the HealthCare Sector Select SPDR (XLV), Vanguard's Health Care ETF (VHT) and iShares U.S. Healthcare ETF (IYH), as well as big biotech plays, like SPDR S&P Biotech (XBI) and iShares Nasdaq Biotechnology (IBB), where Gilead is a top holding.

The art of the budget deal
Republican presidential candidate Donald Trump speaks at a rally at the South Point Hotel & Casino on February 22, 2016 in Las Vegas, Nevada.
Getty Images

Trump claims he could save $300 billion a year on the $4.1 trillion federal budget by negotiating. Since the $400 billion in interest on the debt isn't renegotiable, and Social Security payments of $944 billion are set by statute, the biggest targets for "The Deal Master's" skills are defense contractors, hospitals and doctors, and drug makers who would face repeal of the 2003 ban on Medicare directly negotiating prices.

That would be bad news for hospital owners, like HCA and Tenet, which would already be hit by the repeal of Obamacare. Drug makers would certainly see lower prices: Gilead's $84,000 Hep C drug Sovaldi costs about $30,000 less in Europe.

For defense contractors, like Northrop Grumman and Lockheed Martin, Trump looks like a mixed bag. He has vowed to increase defense spending, but if Trump made good on his vow to show his negotiating magic, the deals might get bigger but less profitable.

The biotechnology ETFs mentioned already, plus the PowerShares Dynamic Pharmaceuticals ETF (PJP), which covers more traditional drug makers, could take a hit. The top three defense and aerospace ETFs are iShares U.S. Aerospace and Defense (ITA), PowerShares Aerospace and Defense ETF (PPA) and the SPDR S&P Aerospace and Defense ETF (XAR).

El muro (the wall)
A man walks along the U.S.-Mexico border wall on February 22, 2015 in Tijuana, Mexico. Senior Republican senators said they expected Congress will avoid a shutdown over the Department of Homeland Security, which faces a partial shutdown on February 27 over a GOP push to roll back President Barack Obama's executive actions on immigration.
Getty Images

Both humorists and investing pundits have focused on Mexican building-materials giant Cemex as a company that might get a big boost from building the estimated $10 billion wall sealing off the U.S. border with Mexico. Some have suggested that private-corrections firms, like GEO Group, would get big contracts for temporarily housing the 11 million or more deportees Trump says he'll expel from the U.S.

Trouble is, the wall is an idea without a sponsor. Trump himself says he'll send the bill to Mexico, where former President Vicente Fox said recently, "I won't pay for that #^&* wall!" Funding for the wall or the mass exodus would hit a wall of its own in a Senate where Democrats are certain to filibuster the idea.

So until someone offers to write the check, the wall and the mass deportation won't move the market at all — because no one really thinks it's a serious proposal. For those who really believe that a Trump presidency will reinforce the belief that cement reinforcements are needed on borders all over the globe, there are infrastructure ETFs, including iShares Global Infrastructure (IGF) and SPDR S&P Global Infrastructure (GII). Though that investment idea may be as big a stretch as Trump's wall itself.

Bad trade
Workers in the Foxconn factory in Shenzhen, China.
AFP | Getty Images

In a meeting with the New York Times editorial board, Trump floated the idea of a 45 percent tariff on imported goods from China, which he claims has kept its currency artificially weak. (Recently, the market has disagreed, pushing the yuan lower, and short-seller Kyle Bass has predicted a 40 percent devaluation.) For the record, and as only Trump can do, he later disagreed with his own comments to the Times, saying during a debate, "It's The New York Times. They are always wrong. " (The Times has a transcript of the comments.)

If such a move did set off retaliation from Beijing, it's worth nothing that U.S. exporters to China account for about 0.7 percent of U.S. output.

But the bigger issue would be a trade war causing a further slowdown in China's growth, which would rattle U.S markets already alert for signs of China contagion. That's one reason Hewlett-Packard Enterprise CEO Meg Whitman said the idea could cause a recession.

So in that case, sell everything, starting with the SPDR S&P 500 and iShares Large Cap China (FXI), or load up on the 1X to 3X short global markets leveraged ETFs, such as Direxion Daily China 3X Bear Shares (YANG), but that's just for day traders.

Take-home pay
John Lund | Getty Images

Trump's proposal to cut corporate taxes and let companies like Apple repatriate their offshore cash is expected to lead to companies putting more cash into dividends and stock buybacks intended to aid U.S. investors. Some critics suggest that most stock buybacks fail to add value: A CNBC analysis of the 25 largest buybacks in recent history found that only 11 of the stocks affected had beaten the market since the buybacks were announced.

The PowerShares Buyback Achievers ETF (PKW) has returned 11.78 percent annually over the past five years, versus 9.98 percent for the SPDR S&P 500 ETF. The ProShares Dividend Achievers ETF (PFM), meanwhile, has returned 9.38 percent annually over the past five years.

So Trump's proposal might help and might not, but likely, it will be hard to tell, since so many other factors affect share prices.

Flare-ups
Udo Weitz | Bloomberg | Getty Images

Trump's skepticism about global warming would certainly be bad news for renewable-energy producers, including companies like SolarCity, whose business relies on tax breaks Trump could try to repeal. Experts at the law firm of McCarter & English note that Trump has said little about energy on the campaign trail or in debates. He favored the Keystone XL pipeline for Canadian oil that President Obama refused to allow to be built to connect Alberta to the southern U.S., but with the price of oil well below the cost of producing oil from Canada's oil sands, a Keystone reversal would be unlikely to move stocks.

Indeed, Trump's biggest impact on oil stocks could be inadvertent: His penchant for inflammatory statements could theoretically set off the short-term spikes in oil prices and shares that occur regularly when markets get worried about geopolitical tensions affecting oil production.

Top renewable-energy ETFs include Guggenheim's Solar ETF (TAN) and the PowerShares WilderHill Clean Energy Portfolio (PBW). The largest energy ETFs more generally are the Energy Select Sector SPDR (XLE) and Vanguard's Energy ETF (VDE). And there is also U.S. Oil (USO) for the straight oil price trade.


Trump 2016, Dow 20,016?
Donald Trump
Mandel Ngan | AFP | Getty Images

Last weekend a columnist for conservative-leaning investing bible Barron's concluded that Hillary Clinton would be a more predictable, calming presence and better for investors than Trump. Talk about going out on a limb (at least on the more predictable and calming parts of the analysis).

On the other hand, CNBC contributor Kevin O'Leary says stocks would go straight up under The Donald, thanks to corporate tax reform.

Voters will have to decide whether Trump is too much for the economy to survive or just what is needed to make a doubtful stock market great again. But clearly, plenty of broad-based index fund options are available for those practicing the art of the trade. And while Kevin O'Leary offers both ETFs and O'Leary-branded fine wines, Trump hasn't even launched his own branded ETF company ... yet.