I have written here before that objective individuals — there are some of us left — see an Obama victory in November. Only diehard Republicans and paid consultants can see it otherwise. And what is becoming clear is not only will the margin of victory be quite large, he is now pulling Democrats along in key Senate races.
Of course, the trading crowd on Wall Street has never thought through the real potential impact of a Romney or an Obama victory. Many see a Romney victory as leading to lower taxes and the repeal of the Affordable Care Act. If Obama quit the race tomorrow, this will not happen.
The Bush tax cuts for the highest earners are gone forever and the ACA is here forever. Why? If the Republicans took the Senate (they will not, they could end up losing a seat) and Romney won all 52 states (I make this joke in honor of the math he is using to discuss the feasibility of his proposed tax cuts and his electoral chances) the Democrats would still have more than 40 seats in the Senate. And they are on record: They will filibuster any changes to the ACA and to re-instating Bush era tax cuts in their current form.
Go forth and make money
To those in either party who think being a blockhead and refusing to govern, to compromise, well, what comes around goes around, eh?
Bottom line: All of this may make me look smart or very stupid on election night, but how do you make money from it all?
- Health care: The Street is already pricing in retention of the ACA but election results will firm support for this sector. I like the device makers – my favorite is a diagnostic testing outfit Cepheid (NASDAQ:CPHD), but it is very volatile and has a high valuation.
- Dividend stocks: They are going to get rocked when, due to the election results, sulking Tea Party types are less cooperative than usual (is that possible?) and we go over the fiscal cliff and preferential treatment for dividends goes away — for a while. The rate on dividends will go up a bit and keep your powder dry, be prepared to buy them after they get rocked between the election and Christmas. I like that old reliable, Annaly Capital (NYSE:NLY) but I also like Calumet Specialty Products (NASDAQ:CLMT).
- Apple (NASDAQ:AAPL) . This company is market- and election-proof over the long haul. I own it and I sell weekly or monthly calls to generate income — 12% per year or more — plus I get the underlying appreciation. You can do the same. Did I mention recent surveys by Changewave Research (part of the 451 Group) that tell me Apple is going to have a fourth quarter well beyond estimates?
If you think I am wrong about the election, or that Bush era tax cuts will be saved or that the ACA is going away, uh, there is a bridge I can make available to you at a good price.