Ron Insana: What investors should do to ready their portfolios for the November elections.

With the significant political changes that have occurred recently, it is understandable for traders to be concerned about the potential impact on the markets and economy in 2025 as a new administration assumes power in January.

If only a handbook existed to provide guidance in the face of the parties' divergent platforms, the stark differences between them would appear more set in stone.

A book that could be titled "Economy Expectations for the Upcoming Year" could provide valuable insights into the potential outcomes of the next economic cycle.

This guide would compare policy platforms, outline economic prospects, predict market behavior, and analyze the risk/reward potential for the macro economy and individual sectors in the first year of a new presidential cycle.

Of course, things do not always turn out as planned.

There are factors beyond the control of domestic leadership, such as the new Congress and unforeseen events, that are influencing the situation.

A handbook for the election and the economy

If such a guide were available, here's how it might look.

The GOP, under Trump's leadership, may look to prolong the 2017 Tax Cuts and Jobs Act and decrease corporate taxes to 15% from the current 21%, while simultaneously imposing tariffs on imports.

A second Trump administration could repeal many Biden-era regulations, including those promoting clean energy.

In the abstract, it can be argued that tax cuts and deregulation are beneficial for businesses. This would be a positive development for Wall Street and, consequently, for financial markets.

The United States' debt to gross domestic product ratio was 123% in the 2023 fiscal year, and further unfunded tax cuts would increase the nation's deficits and debt.

Economists contend that across-the-board tariffs are inflationary and may result in a global trade war, ultimately leading to a recession.

The largest mass deportation of immigrants since the Eisenhower administration is being promised by former President Donald Trump at a time when there are more open jobs in the U.S. than there are available workers, according to the latest data from the Bureau of Labor Statistics.

A significant decrease in the workforce can lead to both inflation and a recession, resulting in stagflation.

Vice President Kamala Harris, who President Joe Biden endorsed as his successor, is awaiting tax policy details from the White House. The White House has called for rolling back the Trump tax cuts and raising the corporate tax rate to 28%.

Wall Street would not fall in love with that delivery.

A stricter regulatory regime could be anticipated, which corporate America has been resisting throughout the Biden administration.

Biden proposed raising the top marginal rate on long-term capital gains and qualified dividends to 44.6%, which is currently at 20%, plus a 3.8% net investment income tax for high earners. He also called on billionaires to pay at least 25% of their income in taxes.

If the economy is softening, a set of tax hikes could lead to a recession, even if the Federal Reserve were to ease interest rate policy further.

Preparing for tumult

Our guide recommends securing profits early in the first year of a presidential cycle, regardless of the new administration, as a hedge against unforeseen events and policy shifts.

Despite uncertainty about the stock market's future, the past two years have been profitable for investors.

It is advisable to set aside some emergency savings to cover any unexpected expenses related to the new administration.

The year 2025 may be referred to as 'the year of living anxiously,' which calls for a sequel to our guide, 'What to Expect in the First Year.'

Ron Insana, a CNBC contributor, is the CEO of iFi.AI, an AI-driven fintech company.