NEW YORK (AP) — Investors have pinned high hopes on President Donald Trump's tax reform proposals, and that's one of the reasons stocks have soared since Trump's election in November.

But there's reason for caution: it's not clear if Washington will deliver as much as investors want, and if there are big changes to the tax code, there may be losers as well as winners.

Whitney George, chairman of Sprott Asset Management USA and the manager of the Sprott Focus Trust, says investors may be hoping for too much when it comes to changes to the tax code.

He advises investors to keep their expectations low and look for buying opportunities rather than betting that tax cuts or changes will lead to a broad rally. Questions and answers have been edited for length and clarity.

Q: What does Wall Street want to see in a tax reform package, and what do investors think tax legislation will ultimately look like?

A: With tax reform the question is, where does the money come from? There are always winners and losers and that may produce kind of a barrier to much happening this year, and if the attempt to repeal and replace the Affordable Care act is any kind of indication, I bet that not much is going to happen.

The idea that you can balance trade by taxing goods at the border and letting people export tax free sounds like a good idea at the outset, but when you start to look at the way our system and companies and industries have been built over many, many years, it would just create so much uncertainty and disruption and confusion and exemptions that it would probably create the opposite of one of the desired goals, which is tax simplification.

Our economy is basically 70 percent consumption, so you are likely raising the price to 70 percent of the economy by taxing imports. The consumer does not want to see the price of all of the goods that we buy globally go up materially any more than they want to see oil prices go up materially. So a tax cut sounds like a great idea that everybody's behind but if you have to fund it by removing exemptions or creating new taxes, that's where you're going to run into trouble.

Q: Are there industries that stand to benefit a lot from the tax ideas that are floating around?

A: The best case is some sort of business tax cut. Small businesses like local law firms and dry cleaners make up the vast majority of the economy. They are taxed as partnerships, which means they get taxed at your personal income tax rate.

Some sort of break there, as he has suggested, probably does make sense and probably does benefit the economy. Particularly if the simplification allows for less tax avoidance, better compliance, less lost time and a pickup in the economy to help pay for it. The United States imports a lot more than it exports, so with a border adjustment tax, the winners would be fewer in number than the losers.

The best I'd hope for is maybe tax simplification, where it's easier to fill out your tax forms and less complicated and you save money with less professionals having to work on your behalf. So you're doing something for small businesses that could help improve employment and growth there. I think that's probably the best thing for the economy.

Q: Is the corporate part of tax reform seen as a major contributor to future earnings growth?

A: If the top corporate tax rate goes from 35 percent to 25 percent, that's a 10-percent bump to S&P earnings. A lot of that got priced into the market pretty quickly. Some companies pay the full 35 percent tax rate and you'll actually see the earnings bump there as they keep more out of every dollar that they earn.

Smaller, simpler businesses, businesses that are in low-tax states, like much of the Midwest, might be better off. One of my concerns is that anything Washington does to cut federal tax rates in some places are likely to be more than eaten up by the state needs to raise taxes.

Q: What are you doing to react to potential tax reform and what do you think investors should do?

A: I think mixing politics and investing is kind of dangerous! What I do is try and know companies very well. I'm a value investor and I like to react to opportunities when short term events create them. So I was adding a bit to retailers, where the news has been very dire on a variety of fronts and the border adjustment tax is scaring people even more. That forced those stock prices down, so the tax is already priced in and they look like good buys.

Canadian energy companies got destroyed as well. So I look for the opportunities that these new developments and news items create. I operate under the assumption that things don't really change that quickly or that dramatically, but sometimes the market prices them as if they do.