It’s hard to believe that the presidential election is just 45 days away now. And I think it’s safe to say that this presidential election is far different from any other I’ve witnessed! The reality is the coronavirus pandemic threw the election cycle and the stock market for a loop, which, in turn, created a lot of uncertainty this presidential election year. And, as I’ve said before, Wall Street hates uncertainty.
Understandably, investors are growing a little nervous about what a contested election, in particular, means for their portfolios. In fact, it was one of the most-asked-about topics during my latest Platinum Growth Club Live Chat Event.
So, today, I’d like to share my thoughts on the subject with you, too.
There’s no denying that a contested presidential election will definitely throw a “wrench in the works,” further weaken the U.S. dollar and likely trigger a stock market selloff. The worst possible scenario is that President Trump appears to win the electoral college but then loses several days later as absentee ballots are counted. Both sides will then contest the presidential election results, which means the Speaker of the House, Nancy Pelosi, will become the next president in January.
If Joe Biden becomes president-elect, the stock market may be hit with some year-end tax selling in anticipation of higher dividend and capital gains taxes. Interestingly, a few weeks ago, Joe Biden stated that he would not raise taxes on anyone making less than $400,000 per year, which encompasses approximately 90% of small businesses. This is where the election is going to be decided — among the business community, the self-employed, the folks living in the suburbs. Since Joe Biden’s tax policy is unclear, it is imperative that his proposed tax increases, especially on qualified dividend and capital gains, are clarified to minimize year-end selling.
However, since President Trump voters seem much more energized than Joe Biden voters, I believe there will be a low Democratic voter turnout and a high Republican voter turnout. In addition, President Trump is polling well with Hispanic voters, so I would not be surprised if the polls break to President Trump, especially with all the recent chaos about opening schools and ongoing social unrest. If President Trump has a decisive victory, I look for a relief rally.
The good news is that even if the worst-case scenario plays out and stocks selloff, they will bounce back.
Here’s why …
First, the U.S. dollar is weakening, which is a windfall for multinationals. Simply put, a weak dollar means bigger profits for the multinationals, as their products are cheaper overseas. Once the international currencies are converted back to dollars, it pads the multinationals’ sales.
Second, the federal government has a major deficit problem — a $3.3 trillion deficit, to be exact. This is three times the deficit from a year ago. So, the U.S. government will need to continue printing money to keep the deficit down.
And third, we remain in an ultra-low interest rate environment. In fact, on Wednesday, the Federal Reserve announced that it will keep interest rates at or near zero through 2023 until the U.S. economy is on stronger footing. Fed Chairman Jerome Powell stated, “rates will remain highly accommodative until the economy is far along in this recovery.” But even if the Fed wanted to raise rates, it can’t because of the huge federal deficit.
So what do you do when interest rates are set to stay low for the foreseeable future?
Currently, the 10-year Treasury yields at about 0.65%. In comparison, the Dow and S&P 500 yield 2.66% and 2.07%, respectively. So, yield-hungry investors will continue to flock to dividend-paying stocks.
So if you’re worried about the presidential election having a lasting negative impact on your portfolio, don’t be. Sure, it might get a little bumpy, but the long-term trend for the stock market continues to point up. Instead, now is the time to focus on which stocks you should be investing in.
Bet on the Fundamentally Superior Stocks
If you’re looking for big profits, your best bet is on fundamentally superior stocks — ones that will post strong third-quarter earnings. The truth of the matter is that this third-quarter earnings season should be stunning. The expectations are very, very high, but the analyst community is also revising their estimates higher. Analysts have upped their estimates about 12% in the past three months to an earnings to decline of 22.2%, year-over-year.
This is really the first time analysts have revised their estimates higher since the second quarter of 2018. Keep in mind that the analyst community is always very cautious, so they’re really putting the pedal to the medal this time!
The bottom line: Don’t let the fear of a contested election scare you out of the market. Instead, invest in the high-quality stocks set to benefit from the third-quarter earnings season. This will put your portfolio in prime position for profits for the rest of the year.
If you’re not sure where to start, I’ve got you covered. I have more than 100 stocks across all my services, and as a Platinum Growth Club subscriber, you have full access to each and every one. If you’d rather start small, I’ve got you covered there, too. My Platinum Growth Club service comes with my exclusive Model Portfolio.
I handpick all of my Model Portfolio recommendations from the different services, so you can rest assured that you’re always invested in the crème de la crème.
If you’re interested, you can click here for full details. If you decide to join me here at Platinum Growth Club, not only will you have instant access to all my recommendations, but you’ll also receive my special report Crisis Master Plan — absolutely free. This is an important read, as it details my blueprint to take advantage of a set of extraordinary financial opportunities that you might not see ever again.
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owned the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
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Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
