Investing for the Presidential Election

Wednesday, 19 Sep 2012 07:51 AM

By John Morgan

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Voters want to know who will win the presidential election in November, but many investors are more focused on what industries and sectors will benefit or lose under a Democratic or Republican White House.

Democrats tend to support stronger environmental regulations, Obamacare and higher taxes on more affluent segments of the population.

By contrast, Republicans are generally viewed as favoring more business-friendly regulations, opposing Obamacare and supporting tax cuts to spur growth.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

US News & World Report predicts that if President Barack Obama wins, investors can expect poor results for the energy and utility industries, since they will face more federal rules and regulations. However, the healthcare industry might be strong, as Obamacare is implemented.

If GOP nominee Mitt Romney wins, the publisher predicts a big boost for energy and utility companies, more exploration of new sources of domestic energy and a more business-friendly approach to government red tape. However, if Republicans succeed in repealing Obamacare, it would have an adverse impact on healthcare insurers.

Regardless of who wins, according to US News & World Report, the biggest loser will be the defense and homeland security focused businesses, as withdrawal from Iraq and a drawdown of involvement in Afghanistan will likely translate into defense budget cuts.

Additionally, US News & World Report projects the fiscal cliff will likely play an even larger role in the markets in the next several months. If sequestration is allowed, the entire economy is viewed as likely in for a difficult period over the next year.

The Wall Street Journal reports that if the results of a tight election are unclear afterward, the uncertainly could cause even more problems.

Both the presidency and 33 Senate seats will be decided in the upcoming election. If court battles drag the final results through November, neither party will have an incentive to resolve the fiscal cliff, according to The Journal.

Economists at Goldman Sachs estimate a 35 percent chance that lawmakers will fail to resolve budget issues by the end of the year, and Moody’s Analytics calculates a 15 percent chance the nation will fall off of the fiscal cliff.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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