Buy Health Care Now? It All Depends On The Election

It is, regrettably, impossible to separate market strategy from the presidential campaign as we approach the Final Days (of the campaign! Of the campaign! It won't be The End of Days no matter who wins and who loses.) Bear with me as we wend our way through the opinionated land mines here...

Many voters and investors have been disgusted by Donald Trump's inability to focus on the Big Issues rather than trying to sell us the blather that he is some kind of Boy Scout. And many have been disgusted, but not surprised, by the revelations now in plain view on Wikileaks of the greed and double-dealing of Hillary Clinton as she claws her way to reach the presidency. It seems strange that Wall Street didn't at least get a little bit of the jitters. But, then, what am I saying? It's Wall Street, and they'll only be chagrined if they find their funding failed to buy them the candidate with their interests uppermost in mind!

(We've all seen "the Real Donald" - regrettably, what you see is what you get - but if you are of a curious bent, you might also want to see some of what Hillary Clinton's thoughts, and her staff's, are, by viewing the actual e-mails at this site: http://www.mostdamagingwikileaks.com.)

I sent a note recently to our clients reading in part, "...The market is steady because 76% of the volume is institutional -- Wall Street traders, pension funds, etc. No one (except the trial lawyers, of course) has contributed more to Hillary Clinton's campaign than Wall Street so it makes sense that they are cautiously optimistic that they'll get a win for their money.

"But what if? What if they are wrong and Donald Trump actually wins? I expect Wall Street will sell, sell, sell and I want to be ready if that happens. We're now marking time, in securities that are liquid and provide income, 'just in case.' If Ms. Clinton wins, the rally is likely to be underwhelming since most institutional money is already in the market. If Mr. Trump wins, we want to be there to pick the newly-low-hanging fruit. We'll see."

If you'd like to see my logic in thinking this might just happen, whether you agree or not, you are welcome to visit my new national and global affairs blog and look at the most recent entry, "Election 2016." You'll find it at jlshaefer.blogspot.com.

So -- the first Wednesday in November could prove to be a real yawner, or it could see a 500-point move (or moves) in one (or more) directions. I maintain this is no time to become overly fearful or overly excited about a particular sector or security but, rather, a time to do research and have cash ready to pounce upon any irrational over-reaction.

How, specifically, might the market landscape change based upon which of the two least popular/most voted for candidates becomes the next chief executive of our country?

In thinking about this, we may, thankfully, leave the realm of character and personality, and may consider instead the likely policy changes each candidate might pursue upon their election.

I have always made money buying the best gas & oil companies, along with their contractors and equipment suppliers, when they are really out of favor. I'd like to be able to do so again. But if Ms. Clinton ascends to the office, I may have to wait a while longer to buy them, as cheap may well become cheaper. She will likely advocate continuing subsidies for more solar and wind companies. The current administration's subsidization of solar and other renewable energy in the U.S. has totaled just under $200 billion the past 5 years. These subsidies have done little to increase the contribution of solar power to the grid as it is still expected to comprise just 0.6 percent of electricity generation this year.

These subsidies haven't done much to generate power; they have, however, increased the money sloshing around for "pay-for-play" favoritism. I imagine a Clinton presidency would continue the current policy of support for massive federally-funded projects. I would also want to consider that horizontal fracturing might be outlawed, and offshore and onshore drilling sharply curtailed. The Saudis would pay dearly to see such a scenario!.

If Mr. Trump is elected, who knows what will happen? He has exhibited a mercurial bent since the campaigning began (and long before.) But I believe he believes his own promise to put Americans back to work in real jobs again and therefore it is likely that we would see a resurgence in American gas and oil exploration and production, along with continued renewables research, in order to make America as energy-independent as possible while creating those jobs. This might not please Saudi Arabia quite as much. In this case, I would look to move into the best domestic gas & oil companies immediately, buying those most currently depressed with the best prospects for success. (Indeed we have already begun nibbling at Southwestern Energy (SWN)

In terms of another favored sector of mine, the banking, insurance and brokerage industries, we know that Ms. Clinton at least "says" she favors more regulation and wants to expand the long arm of Dodd-Frank even more intrusively. Given the funding she has received from Wall Street, we might take her instinct for more and more regulation and contrast it with the biggest firms' desire to see less regulation. It will be interesting to see which wins out, her public platform or private promises.

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Disclaimer: I do not know your personal financial situation, so this is not "personalized" investment advice. I encourage you to do your own due diligence on issues I discuss to see if they ...

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Chee Hin Teh 4 years ago Member's comment

thank for sharing

Chee Hin Teh 4 years ago Member's comment

Thanks for sharing