No matter what you think of Donald Trump’s policies or personality, most agree that, economically speaking, he is unpredictable.

We are not fortunetellers at Equities.com. As Trump begins his second term as president, we can’t forecast precisely what will happen to the stock market, the economy or sustainable investments.

We can, however, make educated guesses, assuming that Trump keeps his promises. As every president learns the hard way, promising to make changes is a lot easier than actually following through on those promises!

The following are our predictions on how the stock market, and certain segments of the economy, may perform now that Trump is back in the White House.

Stock market

It will be hard, but not impossible, for the stock market to surpass its performance in 2024. As of Dec. 31, the S&P 500 was up over 24% for the year, which includes reaching an all-time high of 6,090 last month.

Several analysts and Trump supporters are dreaming of an even better year. They claim that Trump’s promise to cut taxes, enact tariffs and remove regulations should bring the market to euphoric levels. Obviously, they are anxious to outperform former President Joe Biden.

Conversely, others are predicting that a severe correction is inevitable, perhaps even a crash. Since the market doesn’t like uncertainty, they argue, Trump’s erratic governing style will push volatility to the extremes. Thus, a crash is possible.

Wild card

Trump is unpredictable. One post on X in the middle of the night by the U.S. president is all it takes to send the market, or certain stocks, to the moon — or plummeting to the ground.

Since Trump is not renowned for making deliberate, thoughtful decisions, expect market sectors and stocks favored by Trump, such as energy and crypto, to make gains. Stocks that are in his doghouse may not fare as well, such as climate change.

Caveat: There are no guarantees as to how these sectors will perform.

Bubble territory

Howard Marks, co-chairman of Oaktree Capital Management, and a renowned value investor and billionaire, in a memo to clients on Jan. 2 suggested that the stock market may be in bubble territory.

The third stage of a bubble, Marks wrote, “is after a period in which economic news has been great, companies have reported soaring earnings, and stocks have appreciated wildly, everyone concludes that things can only get better forever.” It has nothing to do with economic or corporate events, he added, but investor psychology.

Marks pointed out that the “sexiest” of the Magnificent Seven stocks is Nvidia NVDA , the leading designer of chips for artificial intelligence. The search for the hot new thing leads to a “lottery ticket mentality.” “That’s where the bubble comes in,” he wrote.

To be clear, Marks did not say that stocks are in a bubble. But he did warn that some of the signs of a bubble are present.

Jeffrey Bierman, chief market technician at TheoTrade.com and an adjunct professor of finance at Loyola University Chicago, warns that stocks are susceptible to a reversal, especially AI-related stocks.

“It only takes a snap of the finger in a matter of seconds to wipe out these stocks. If investors fall out of love with Amazon AMZN and Nvidia NVDA , it could be the death knell that forces the market lower. Then people start selling anything as opposed to selling specific stocks. That’s my concern,” Bierman told Equities.com.

Bottom line: The market should be volatile in 2025, especially if Trump implements high tariffs, mass deportations, tax cuts and deregulatory policies. The effects of these policies cannot be predicted at this time. It would be unwise to make big bets on any one sector.

Speaking of sectors, let’s take a closer look at a few market sectors that may rise or fall depending on Trump’s policies.

Sustainable investments

Many experts believe that the Trump administration will “roll back ESG initiatives, posing challenges for low-carbon transition and sustainable investments.” Trump, hours after being sworn into office, withdrew the U.S. from the Paris agreement (again). He could also eliminate clean energy subsidies in the Inflation Reduction Act signed into law by Biden.

One opportunity for sustainable investors is “energy transition,” including the move to electrical vehicles and increase in wind, solar and other green energy sources. While the Trump administration may not be a friend to sustainable investments, it won’t stop consumers and companies from pursuing common-sense solutions to environmental problems.

Bottom line: Analysts predict sustainable investments are expected to succeed in 2025 because of strong investor demand and a lower interest rate environment. But don’t expect any help from the Trump administration.

Oil stocks

One of Trump’s go-to slogans is “Drill, baby, drill.” If the president follows through on his promise to increase energy production, gas prices may fall along with oil stocks. Oil stocks had an excellent run during Biden’s term, and may reverse direction if Trump keeps his drill promise.

Keep in mind that not all analysts agree with this assessment. Some believe oil stocks will continue to rally under the Trump administration, especially if Trump rolls back environmental restrictions. If Trump repeals the Inflation Reduction Act, several clean energy incentives built into the program could be reversed. Many sustainable and renewable energy experts are taking a wait-and-see approach, but are prepared to take legal action to protect the environment if needed.

Housing stocks

The president does not control mortgage rates, nor does the Federal Reserve. In reality, the Fed influences mortgage rates using a variety of economic tools, but doesn’t set them directly. Nevertheless, if Trump deregulates the housing market by reforming zoning laws and land use regulations, housing prices may fall (the number of houses for sale would increase).

There are other actions the Trump administration could take including reducing tenant protection laws and building permit procedures. These cumulative actions could be positive for the housing sector, including home building and real estate stocks.

Bottom line: Even if the Trump administration took all of these actions, it would take a long time to implement, and mortgage rates might remain stubbornly high.

Bonds

Unbeknownst to many investors, the bond market affects the economy much more than the stock market. “The bond market drives everything,” Bierman said.

“The bond market usually signals what equities are going to do. It may be counterintuitive, but the more the bond market sells off, the higher equities go. If the bond market rallies, it could cause a market selloff,” he added.

Although bonds had a lackluster 2024, many bond investors believe this will be a positive year relative to stocks, especially if the Fed keeps cutting rates. One investment opportunity for impact investors is sustainability-linked bonds. The idea is to invest in bonds that are structured to help improve the climate and environment.

Note: Bond prices and yields have an inverse relationship.

Crypto

Many crypto investors believe that Trump will be their best friend over the next four years. After Trump won, bitcoin rallied to over 100,000 per coin, where it remains. Many other crypto currencies went along for the ride even higher.

Although the Trump administration may initiate crypto-friendly policies, one thing experienced traders know for a fact: When something in the financial markets appears as a slam-dunk trade, typically the opposite occurs. It’s still unknown whether crypto is the greatest financial product ever created or a tulip bulb waiting to implode (i.e., Dutch mania of 1636).

Bottom line: In the near term, many analysts are bullish on crypto. As always, no one knows how long the good times may last.

Conclusion

To minimize risk to your stock portfolio, use basic risk-management strategies such as diversification and asset allocation. Keep a healthy amount of cash on the side to take advantage of sectors that are temporarily beaten down. More than likely, 2025 will not be an easy ride higher, as happened in the recent past. Prepare for a lot of volatility — and a wild ride — in either, or both, directions.

Read more: Consider these DEI initiatives under a second Trump administration