It's certainly clear that Trump is a polarizing force, which has created interesting two-way markets both here and abroad. While I agree with most of his agenda, I am concerned that his foreign trade policy may jeopardize several long-term relationships and ultimately hurt US consumers. Consumption is over two thirds of our GNP and we have consistently run trade deficits as large importers of oil and goods from lower cost nations which benefits our consumers. It's not like a label declaring "made in Japan," signifies a product being inferior as it may have 40 years ago. There is nothing wrong with a Toyota, Sony or an Apple phone made abroad.

Globalization is a good thing but clear violations of trade agreements can and will be stopped quickly under a Trump administration. Just because Mexico runs a $60 billion trade surplus with the U.S does not mean that they are dumping unfairly. Trump cannot take a cookie cutter approach to a trade policy. It differs by country and by product. For example, should we put a 20% tariff on agricultural products, such as fruits and vegetables, from South America, which we need in the winter months? Should we penalize manufacturers who built plants abroad as our policies here forced them to make that move years ago? I can go on and on about viable exceptions to his "tariff." 

Global competition is a good thing as it holds prices down and is good for the consumer. Trump is already negotiating with our trade partners. I see him opening with an extreme position knowing he would accept less, leaving us better off than where we are now. He will, at the same, time create an environment where companies, both domestic and foreign, want to build plants right here to not only supply our needs but also to export abroad. I agree with the concept of bilateral negotiations between nations rather than multilateral agreements. Trump has the right team in place to make it work. 

If we look through the windshield, we should invest on the belief that Trump's trade policies will lead to more capacity being built right here rather than focusing on what may or may not be affected by presumed import penalties at the border. If import taxes, similar to what Germany and other countries use, are passed as part of an overall tax legislation reducing individual and corporate taxes, then that may be a different story. It is clear that our trade deficit will decline over time despite a strong dollar as more plants are built here to supply our needs and Trump's plan for energy independence is passed which will lead to less foreign imports and a boost in exports of energy products.

Don't take Trump literally. He is the ultimate negotiator. Don't act on every tweet as his final position will often differ. His tweets have a purpose, that being, to put the ones he is negotiating with on notice. Just ask the healthcare, auto and defense executives and board members if his tweets have had an impact on their policies! Haven't you seen more companies, both domestic and foreign, announce new plants here? What about the prices of fighter jets and the new Air Force 1 going down? Haven't you seen the healthcare industry publish annual price increases for the first time? This is good stuff that would have never happened if Hillary were in office. And it's just the beginning!

Mindsets shifts and welcome change is in the air.

Trump is talking the talk and walking the walk. Have you noticed what he accomplished in his first week in office? He signed about a dozen executive orders keeping campaign promises from healthcare to the wall; he met with business and labor leaders: and spoke with several foreign leaders. He is the most hands-on President I have seen in my lifetime. And don't expect that to change as we move forward. He will be involved in every major decision and will likely micro-manage each, much like Steve Jobs at Apple, but that worked out all right, didn't it?

Where are we going and what are the investment ramifications?

It's clear that Trump and his team are serious about following through on his campaign promises. He clearly has stopped the pendulum from swinging further left to moving back to the center and maybe even right on some issues. Fortunately, he has a Republican Congress to back his play and he clearly is working closely with Paul Ryan and Mitch McConnell to the surprise of many skeptics. I am more optimistic that most that his agenda will be passed over the next 6 to 8 months.

His message has been heard loud and clear that the United States is open for business and our interests come first. A strong U.S. is good for all nations as we will once again be the engine for global growth and a force to be reckoned with. A change in perception and a positive shift at the margin go a long way when considering how and where to invest. While the total pie will grow, there will be clear winners and losers within in. Invest where the wind is to your back and refrain from areas where government policies may inhibit profitable growth.

The bottom line is to invest in reflation beficiaries including industrials, capital goods, infrastructure-related companies, commodity companies including energy, steel, chemical and aluminum, financials and technology while reducing your exposure to the old winners, including bonds, consumer non-durables, utilities, income stocks, retail, and pharmaceuticals. And stay long the dollar too.

Marginal change, both positive and negative, is one of my rules for investing. I look for and invest for change. Markets here and abroad will benefit from acceleration in global growth. Profits will expand more rapidly than generally assumed, as the positive operating leverage from growing volume will surprise even managements who maintain a cautious posture for the foreseeable future. Expect the monetary authorities to remain one step behind until they see the impact of future legislation on growth and inflation. Expect the yield curves to continue to steepen.

Remember to review all the facts; pause, reflect and consider mindset shifts; adjust your capital allocation and risk controls; do independent research on each potential investment and ....

Invest Accordingly!

William A. Ehrman is managing partner at Paix et Prosperite LLC. He served as head of the Investment committee at Century Capital Associates, followed by head of investments for Worldwide Equities and Private Equities at the Quantum Fund. He was George Soros’ first partner.